IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v39y2016i3p287-307.html
   My bibliography  Save this article

On the nature and role of financial systems in Keynes’s entrepreneurial economies

Author

Listed:
  • Fernando J. Cardim de Carvalho

Abstract

In his debate with Bertil Ohlin, Keynes observed that entrepreneurs, when deciding to invest, have to be sure they will access the amount of finance necessary to initiate the investment process and that they will be able, when the time comes, to fund their debts in ways that are adequate to the profile of assets they are purchasing. In this statement, Keynes outlines the functions of financial systems in Entrepreneurial Economies, the type of economies he hypothesizes we live in. In entrepreneurial economies, investing firms have to be able to get hold of the necessary amount of means of payment required to purchase or order investment goods and to build balance sheets where in- and outflows of cash are broadly matched within reasonable margins of safety. This means that financial systems’ primary role in Keynesian economics is not to allocate savings or capital but to allocate liquidity and to allow investors to build liquid balance sheets. The article develops this proposition, presenting Keynes's basic concepts on the matter and showing how modern financial systems perform their role.

Suggested Citation

  • Fernando J. Cardim de Carvalho, 2016. "On the nature and role of financial systems in Keynes’s entrepreneurial economies," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 39(3), pages 287-307, July.
    • Handle: RePEc:mes:postke:v:39:y:2016:i:3:p:287-307
    DOI: 10.1080/01603477.2016.1190282
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/01603477.2016.1190282
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01603477.2016.1190282?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fernando J. Cardim de Carvalho, 1992. "Mr Keynes And The Post Keynesians," Books, Edward Elgar Publishing, number 79.
    2. Peter Boone & C Goodhart & Andrew Haldane & Simon Johnson & John Kay & Andrew Large & Richard Layard & Andrew Smithers & A Turner & S Wadhwani & Martin Wolf & Paul Woolley, 2010. "In brief: The future of finance," CentrePiece - The magazine for economic performance 327, Centre for Economic Performance, LSE.
    3. Paul Davidson, 2002. "Financial Markets, Money and the Real World," Books, Edward Elgar Publishing, number 2467.
    4. James Tobin, 1963. "Commercial Banks as Creators of 'Money'," Cowles Foundation Discussion Papers 159, Cowles Foundation for Research in Economics, Yale University.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander Lipton, 2015. "Modern Monetary Circuit Theory, Stability of Interconnected Banking Network, and Balance Sheet Optimization for Individual Banks," Papers 1510.07608, arXiv.org.
    2. Alexander Lipton, 2016. "Modern Monetary Circuit Theory, Stability Of Interconnected Banking Network, And Balance Sheet Optimization For Individual Banks," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 19(06), pages 1-57, September.
    3. Dimitrios Tsomocos, 2003. "Equilibrium analysis, banking, contagion and financial fragility," FMG Discussion Papers dp450, Financial Markets Group.
    4. Bansal, Ravi & Miller, Shane & Song, Dongho & Yaron, Amir, 2021. "The term structure of equity risk premia," Journal of Financial Economics, Elsevier, vol. 142(3), pages 1209-1228.
    5. Paolo Angelini & Laurent Clerc & Vasco Cúrdia & Leonardo Gambacorta & Andrea Gerali & Alberto Locarno & Roberto Motto & Werner Roeger & Skander Van den Heuvel & Jan Vlček, 2015. "Basel III: Long-term Impact on Economic Performance and Fluctuations," Manchester School, University of Manchester, vol. 83(2), pages 217-251, March.
    6. Thompson, G. F., 1998. "Encountering economics and accounting: some skirmishes and engagements," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 283-323, April.
    7. Brunnermeier, Markus K. & Niepelt, Dirk, 2019. "On the equivalence of private and public money," Journal of Monetary Economics, Elsevier, vol. 106(C), pages 27-41.
    8. Jochen Hartwig, 2006. "Explaining the aggregate price level with Keynes's principle of effective demand," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 469-492.
    9. Riccardo De Bonis & Matteo Piazza, 2021. "A silent revolution. How central bank statistics have changed in the last 25 years," PSL Quarterly Review, Economia civile, vol. 74(299), pages 347-371.
    10. repec:abd:kauiea:v:30:y:2017:i:2:p:71-78 is not listed on IDEAS
    11. Sophie van Huellen, 2020. "Approaches To Price Formation In Financialized Commodity Markets," Journal of Economic Surveys, Wiley Blackwell, vol. 34(1), pages 219-237, February.
    12. Biagio Bossone, 2021. "Bank Seigniorage in a Monetary Production Economy," Working Papers PKWP2111, Post Keynesian Economics Society (PKES).
    13. Fritz, Barbara & Biancareli, André & Mühlich, Laurissa, 2012. "Regional payment systems: A comparative perspective on Europe and the developing world," Discussion Papers 2012/10, Free University Berlin, School of Business & Economics.
    14. Jochen Hartwig, 2017. "The Comparative Statics of Effective Demand," Review of Political Economy, Taylor & Francis Journals, vol. 29(3), pages 360-375, July.
    15. Goodhart, Charles, 1989. "The Conduct of Monetary Policy," Economic Journal, Royal Economic Society, vol. 99(396), pages 293-346, June.
    16. Pavlina R. Tcherneva, 2008. "The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?," Economics Working Paper Archive wp_539, Levy Economics Institute.
    17. Studart, Rogério, 2005. "The State, the markets and development financing," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    18. Marcelo de Oliveira Passos & José Luís Oreiro, 2008. "A post Keynesian macrodynamic simulation model for an open economy," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211235250, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    19. Christine A. Parlour & Uday Rajan & Johan Walden, 2022. "Payment System Externalities," Journal of Finance, American Finance Association, vol. 77(2), pages 1019-1053, April.
    20. Ramis Khabibullin & Alexey Ponomarenko & Sergei Seleznev, 2018. "Forecasting the implications of foreign exchange reserve accumulation with an agent-based model," Bank of Russia Working Paper Series wps37, Bank of Russia.
    21. Modenesi, Rui Lyrio & Modenesi, André de Melo & Martins, Norberto Montani & Fontaine, Patrick, 2015. "Restructuring the Economic Policy Framework in Brazil: Genuine or Gattopardo change?," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 17.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:39:y:2016:i:3:p:287-307. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.