Incentive Problems in Financial Conglomerates ∗
نویسندگان
چکیده
This paper analyzes how scope-expansion by a bank affects its lending activity. Scope economies between activities naturally arises from an incentive problem in the lending business. It shows that the sale of multiple product can impede banks to credibly commit to penalize borrowers in default. Thus, borrowers are more likely to face soft budget constraint. It finds that a more competitive environment in the additional activity is more likely to aggravate incentive problems in multiproduct banks.
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