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July/August 2003, 
Vol. 85, No. 4
Posted 2003-07-01

Monetary Policy and Financial Market Evolution

by Valerie R. Bencivenga and Bruce D. Smith

This article considers a model in which both the resource cost of saving through intermediaries and monetary policy, specifically the money growth rate, are important determinants of (i) whether banks are used and (ii) the level of per capita income.