Classifications
Here is one proposed classification system for defining types of narrow banks:
Lenders have to become investors (cases PS, PL). The table below shows four different cases of narrow banking.
| Permitted to possess short-term safe assets (S) | Permitted to possess long-term safe assets (L) as well as short-term assets |
|
|---|---|---|
| Prohibited from conducting lending activity (P) | PS Full-reserve banking |
PL |
| Permitted to conduct lending activity (L) | LS This case advocaded by Kobayakawa and Nakamura has a synergy effect between deposit taking and lending |
LL This case shows some similarities with fractional-reserve banking but is still more restricted |
Read more about this topic: Narrow Banking