Rejoinder to Davidson on the Ethics of Loan Maturity Mismatching and Fractional Reserve Banking
Keywords:Fractional reserves, Banking, Loan maturity mismatching
Davidson (2014) takes the position that there is nothing unethical about loan maturity mismatching, particularly when a bank borrows money for a shorter time horizon than when it lends it out. The present paper takes issue with her position, and maintains that not only is this practice unethical, it should be outlawed.
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