Introduction

Starting with the seminal paper by Black (1970), a stream of studies based on information asymmetries has been focussing on the nature of financial intermediation, in the attempt to provide a theoretical foundation to the uniqueness of the banks, denied by the ‘new view’ and, more recently, by the so called ‘Legal Restrictions Theory’ (LRT).

The features, embedded in a bank, which this literature tries to explain, in order to provide a rationale for a special role among the intermediaries and hence a conceptual framework for a regulatory and supervision policy, are that:

1. a large proportion of the assets – i.e. loans – in a diversified portfolio is highly illiquid;

2. most of the liabilities are of a standard debt-contract type, with predetermined money value, regardless of the performance of the underlying portfolio;

3. a portion of the debt liabilities has the form of perfectly liquid demand deposits.

In the ‘new view’ proposed by Gurley, Shaw and Tobin in the early 1960s, banks differ from other intermediaries simply because of the regulations imposed on them. Fixed-value liabilities convertible at will into cash, such as demand deposits, are the result of an historical event, namely the central role of the banks in the payment system. Similar reasoning, though with different implications, has been pursued by the proponents of LRT (Kareken, Wallace, Fama), whose claim is that the production of monetary services is not associated with any specific intermediary.