01279nam a22001577a 4500 190323b xxu||||| |||| 00| 0 eng d 0304-405X Warehouse banking / by Jason Roderick Donaldson, Giorgia Piacentino & Anjan Thakor Jason Roderick Donaldson, Giorgia Piacentino & Anjan Thakor Pages 250-267 Journal of Financial Economics 129 (2) 0304-405X Abstract We develop a theory of banking that explains why banks started out as commodities warehouses. We show that warehouses become banks because their superior storage technology allows them to enforce the repayment of loans most effectively. Further, interbank markets emerge endogenously to support this enforcement mechanism. Even though warehouses store deposits of real goods, they make loans by writing new fake warehouse receipts, rather than by taking deposits out of storage. Our theory helps to explain how modern banks create funding liquidity and why they combine warehousing (custody and deposit-taking), lending, and private money creation within the same institutions. It also casts light on a number of contemporary regulatory policies. Banking Private money Financial history lcc SE 361361 361361 0 0 lcc 0 CL CL PER 2019-03-23 0 2019-03-23 00:00:00 2019-03-23 SE