Financial Management White Papers
Resolving the Puzzle of the Under issuance of National Bank Notes
Overview This paper focuses on the puzzle of under issuance of national bank notes, which disappears when one disaggregates data, takes account of regulatory limits, and considers differences in opportunity costs. Banks with poor lending opportunities maximized their issuance. Other banks chose to limit issuance. Redemption costs do not explain cross-sectional variation in issuance and the observed relationship between note issuance and excess reserves is inconsistent with the redemption risk hypothesis of under issuance.
| Publisher | National Bureau Of Economic Research | File Format | PDF, requires Acrobat Rdr 5 |
|---|---|---|---|
| Date Published | December 2004 | Downloads | 4 |
| Format | White Papers | ||
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