Competitive Screening in Credit Markets with Adverse Selection: A “Cover Version” of Bester’s Model
نویسنده
چکیده
This note presents a simple model of competitive screening in a credit market with adverse selection, where firms use interest and collateral as instruments for screening borrowers’ risk type. While the basic ideas appear in Bester (1985,1987), this version of the model is far more useful pedagogically, also (arguably) when compared with models that are more conventionally employed for this purpose.
منابع مشابه
Competition and Strategic Information Acquisition in Credit Markets∗
Regulatory changes and technological advances have profoundly affected the competitive landscape of credit markets. In this paper, we investigate the role of information acquisition as a strategic tool for intermediaries to respond to competitive pressures. We specify a model in which the severity of asymmetric information between banks and borrowers varies with distance. Banks acquire borrower...
متن کاملAdverse Selection In Credit Markets With Costly Screening
We develop a credit market model with adverse selection where risk-neutral borrowers self select because lenders make use of a costly screening technology. The model has some features which are similar to the Rothschild-Stiglitz adverse selection model. If an equilibrium exists it is a separating equilibrium, and there exist parameter values for which an equilibrium does not exist. Equilibrium ...
متن کاملThe Resilience of the Iranian Banking System to Macro Shocks with an Emphasis on Credit Risk
In this paper, we present the macro stress test with a credit risk approach for banking system of Iran during the period 2004Q1-2019Q4. The goal is to evaluate the vulnerability of the banking system through credit risk to the country economic shocks. In this regard, the developed method of Wilson (1997) Credit Portfolio View model including macroeconomic variables and default rate has been use...
متن کاملCompetition and Adverse Selection in Consumer Credit Markets:
We investigate the relationship between payday lenders, which offer small, short-term consumer loans, and traditional depository institutions using a national survey on the provision and pricing of checking account services. Somewhat surprisingly, we find that payday loan competition leads to higher prices for overdraft credit and bounced check transactions at traditional depositories. In addit...
متن کاملCredit and equity rationing in markets with adverse selection
Previous theories of "nancial market rationing focussed on a single market, either the credit or the equity market. An interesting question is whether credit and equity rationing are mutually compatible, and how they interact. We consider a model with twodimensional asymmetric information, where entrepreneurs have private information about both the expected returns and the risk of their project...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2013