Essays on Incompleteness in Financial Markets and Contracts

Xun Xu
In Chapter 1 of my dissertation, I study how should the banking system be designed under a setting where markets and contracts are incomplete, to most efficiently create the private money in an economy (i.e., bank deposits), which need to be made both liquid and safe. I identify three market failures: an incentive problem, a commitment problem, and a coordination problem, as consequences of the combination of a safe asset creation constraint under liquidity risks...
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