This session covers Lecture 17: Direct and Indirect Finance Until now, we haven't been talking as much about banks as intermediaries. The lecture will help us think about next week's Gurley and Shaw reading, which emphasizes indirect finance and intermediation. Mehrling tells a story about how the money market and capital market became intertwined, why …

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This session covers Reading 9: the first part of Chapter 5 of Money in a Theory of Finance by Gurley and Shaw (1960) Reinforcing some of what we learned in Lecture 17, Gurley and Shaw present a model that emphasizes funding over payments. "Primary debt" is any debt that directly funds a real investment—direct investment. …

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This session covers Lecture 18: Forwards and Futures The lecture is somewhat of a sequel to Lecture 8, which talked about lining up the timings of cashflows and cash commitments. People can use forwards and futures to match up the time pattern of their cash inflows with their cash commitments. Our exploration of forward contracts …

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