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Ib Ravn

Werner's Typology of Banking Theories

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Werner's Typology of Banking Theories. / Ravn, Ib.

I: Forum for Social Economics, 26.09.2019.

Publikation: Bidrag til tidsskrift/Konferencebidrag i tidsskrift /Bidrag til avisTidsskriftartikelForskningpeer review

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Ravn, Ib. / Werner's Typology of Banking Theories. I: Forum for Social Economics. 2019.

Bibtex

@article{ef07161d0b5e4bbb8b0dc13310c20576,
title = "Werner's Typology of Banking Theories",
abstract = "This paper examines and critiques a highly illuminating typology of three banking theories. The typology was proposed by Richard A. Werner, and it identifies the financial intermediation theory, the fractional reserve theory and the credit creation theory. Two experiments testing them are reviewed, as well as the explanation offered by Werner for retaining only the credit creation theory. Werner{\textquoteright}s research is unique in that it tracks actual bank records during a loan transaction. Yet, his conclusion—that banks individually can create credit—downplays the key role of the collectivity of banks in enabling borrowers to use their credit for making payments. Two neglected contexts for the three theories are proposed: one historical, involving monetary regimes, the other systemic, involving interbank clearing arrangements. It is found that the three theories are associated with different monetary regimes (relating to specie, reserves, and account money, respectively) and, despite Werner{\textquoteright}s rejection of two of them, they all remain appropriate in proportion to the prevalence of the respective monies in the case at hand.",
keywords = "Financial intermediation, Fractional reserve banking, Credit creation, Banking, Money, Money creation, Credit, Clearing, Payments systems, Monetary economics, money creation, credit creation, banks, banking, banking theory, Monetary theory, Financial intermediation, Fractional reserve banking, money, clearing, Clearing systems, Goldsmith banking, Central banks",
author = "Ib Ravn",
year = "2019",
month = sep,
day = "26",
doi = "10.1080/07360932.2019.1668286",
language = "English",
journal = "Forum for Social Economics",
issn = "0736-0932",
publisher = "Routledge",

}

RIS

TY - JOUR

T1 - Werner's Typology of Banking Theories

AU - Ravn, Ib

PY - 2019/9/26

Y1 - 2019/9/26

N2 - This paper examines and critiques a highly illuminating typology of three banking theories. The typology was proposed by Richard A. Werner, and it identifies the financial intermediation theory, the fractional reserve theory and the credit creation theory. Two experiments testing them are reviewed, as well as the explanation offered by Werner for retaining only the credit creation theory. Werner’s research is unique in that it tracks actual bank records during a loan transaction. Yet, his conclusion—that banks individually can create credit—downplays the key role of the collectivity of banks in enabling borrowers to use their credit for making payments. Two neglected contexts for the three theories are proposed: one historical, involving monetary regimes, the other systemic, involving interbank clearing arrangements. It is found that the three theories are associated with different monetary regimes (relating to specie, reserves, and account money, respectively) and, despite Werner’s rejection of two of them, they all remain appropriate in proportion to the prevalence of the respective monies in the case at hand.

AB - This paper examines and critiques a highly illuminating typology of three banking theories. The typology was proposed by Richard A. Werner, and it identifies the financial intermediation theory, the fractional reserve theory and the credit creation theory. Two experiments testing them are reviewed, as well as the explanation offered by Werner for retaining only the credit creation theory. Werner’s research is unique in that it tracks actual bank records during a loan transaction. Yet, his conclusion—that banks individually can create credit—downplays the key role of the collectivity of banks in enabling borrowers to use their credit for making payments. Two neglected contexts for the three theories are proposed: one historical, involving monetary regimes, the other systemic, involving interbank clearing arrangements. It is found that the three theories are associated with different monetary regimes (relating to specie, reserves, and account money, respectively) and, despite Werner’s rejection of two of them, they all remain appropriate in proportion to the prevalence of the respective monies in the case at hand.

KW - Financial intermediation

KW - Fractional reserve banking

KW - Credit creation

KW - Banking

KW - Money

KW - Money creation

KW - Credit

KW - Clearing

KW - Payments systems

KW - Monetary economics

KW - money creation

KW - credit creation

KW - banks

KW - banking

KW - banking theory

KW - Monetary theory

KW - Financial intermediation

KW - Fractional reserve banking

KW - money

KW - clearing

KW - Clearing systems

KW - Goldsmith banking

KW - Central banks

UR - http://www.scopus.com/inward/record.url?scp=85073940749&partnerID=8YFLogxK

U2 - 10.1080/07360932.2019.1668286

DO - 10.1080/07360932.2019.1668286

M3 - Journal article

JO - Forum for Social Economics

JF - Forum for Social Economics

SN - 0736-0932

ER -