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- Title
DISCUSSION: JAMES L. BICKSLER.
- Authors
Bicksler, James L.
- Abstract
There is little doubt that a theory of financial intermediaries has not yet been systematically and rigorously formulated. In an ambitious attempt in this regard, Benston and Smith (hereafter B-S) specify that the necessary conditions for a meaningful analytical framework of the demand for financial services are that it incorporates a multiperiod model whereby the individual is postulated to maximize expected utility of consumption, risk is explicitly recognized, and both substitution effects and transaction costs are integrated into the analysis. B-S feel that the standard form of the CAPM meets "all of the above listed minimal requirements except the last, that it be capable of examining non-zero transaction costs." However, B-S feel that the efficient frontier mappings can be changed to approximately reflect transaction costs and hence Sharpe-Lintner theory is presumably an appropriate analytical dimension in deriving a theory of financial intermediaries.
- Subjects
INTERMEDIATION (Finance); BANKING industry; DEMAND for money; COMPENSATORY balances; TRANSACTION costs; FINANCIAL services industry
- Publication
Journal of Finance (Wiley-Blackwell), 1976, Vol 31, Issue 2, p252
- ISSN
0022-1082
- Publication type
Article
- DOI
10.2307/2326598