The Purpose of Banking: Transforming Banking for Stability and Economic Growth

249 Pages·2019·9.447 MB·English

by  Anjan V. Thakor

The Purpose of Banking

The Purpose
of Banking
Transforming Banking for Stability
and Economic Growth
ANJAN V. THAKOR
1
3
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Library of Congress Cataloging- in- Publication Data
Names: Thakor, Anjan V., author.
Title: The purpose of banking : transforming banking for stability and
economic growth / Anjan V. Thakor.
Description: New York : Oxford University Press, [2019]
Identifiers: LCCN 2018031498 | ISBN 9780190919535 (hardcover) |
ISBN 9780190919542 (updf) | ISBN 9780190919559 (epub)
Subjects: LCSH: Banks and banking. | Banking law. | Economic development.
Classification: LCC HG1601 .T355 2018 | DDC 332.1— dc23
LC record available at https:// lccn.loc.gov/ 2018031498
9 8 7 6 5 4 3 2 1
Printed by Sheridan Books, Inc., United States of America
To the latest inspirations for my higher purpose: Aiden and Lily.

Contents
Introduction: The Columbo Approach: A Bird’s- Eye View of the Book 1
ACT I. The Purpose of Banks: What Banks Do and Why
1. Money, Guns, and Lawyers: The Business of Banking 7
2. The Origins of Banking and the Services Banks Provide: Customers,
Investors, and Other Stakeholders 17
3. Out of Sight, Out of Mind? Off- Balance- Sheet Banking 33
ACT II. Bank Decision-M aking and the Regulation of Banks: 
Capital, Regulation, Purpose, and Culture
4. When Your Chickens Come Home to Roost: Bank Capital
Regulation and the Search for Financial Stability 51
5. Higher Purpose, Culture, and Capital: Is Banking on Culture
a Capital Idea? 69
ACT III. Banks and Markets: Interactions That Affect Stability and Growth
6. Financial System Architecture: Where Do Banks Sit in the
Financial System? 95
7. Changes in Banking over Time 105
viii Contents
ACT IV. Financial Crises: Causes, Effects, and Cures
8. Financial Crises and Banks: What Caused the Great Recession,
and What Were Its Effects? 117
ACT V. Reforming Banking and Looking Ahead: Improving Banking
and the Potential Interactions with Fintech
9. The Final Frontier: An Improved Banking System to Achieve
Financial Stability and Economic Growth 159
10. Closing Curtain: Should Banking Be Fundamentally Redesigned? 179
11. Summing Up and Looking Ahead: Fintech and Banking 203
Name Index 213
Subject Index 219
The Purpose of Banking