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Payment Obligations, Liquidity Management, and the Demand for Central Bank Balances

Heller, Daniel and Lengwiler, Yvan. (2003) Payment Obligations, Liquidity Management, and the Demand for Central Bank Balances. Journal of monetary economics, Vol. 50. pp. 419-432.

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Official URL: http://edoc.unibas.ch/dok/A5253749

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Abstract

We develop a model in which a bank's demand for reserves depends on the joint distribution of transactions, reserve requirements, and the interest rate. By devoting resources to its liquidity management, a bank can save on costly reserves required to settle its payments on time. We test the model with data from the largest banks in the Swiss Interbank Clearing system. We find that the turnover ratio (the speed with which a bank turns over its reserves in the payment system) depends largely on the aggregate value of its payments. We also find that reserve requirements impose a highly uneven burden on the banks.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Finanzmärkte (Lengwiler)
UniBasel Contributors:Lengwiler, Yvan
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:Elsevier
ISSN:0304-3932
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:14 Sep 2012 06:45
Deposited On:22 Mar 2012 14:03

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