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Asymmetric Information and the Market Structure of the Banking Industry

1998-06-01 Business & Economics
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Release : 1998-06-01
Genre : Business & Economics
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Book Rating : 54X/5 ( reviews)

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Book Synopsis Asymmetric Information and the Market Structure of the Banking Industry by : Mr.Giovanni Dell'Ariccia

Download or read book Asymmetric Information and the Market Structure of the Banking Industry written by Mr.Giovanni Dell'Ariccia. This book was released on 1998-06-01. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes the effects of informational asymmetries on the market structure of the banking industry in a multi-period model of spatial competition. All lenders face uncertainty with regard to borrowers’ creditworthiness, but, in the process of lending, incumbent banks gather proprietary information about their clients, acquiring an advantage over potential entrants. These informational asymmetries are an important determinant of the industry structure and may represent a barrier to entry for new banks. The paper shows that, in contrast with traditional models of horizontal differentiation, the steady-state equilibrium is characterized by a finite number of banks even in the absence of fixed costs.

Asymmetric Information and the Structure of the Banking Industry

2001
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Release : 2001
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Book Synopsis Asymmetric Information and the Structure of the Banking Industry by : Giovanni Dell'Ariccia

Download or read book Asymmetric Information and the Structure of the Banking Industry written by Giovanni Dell'Ariccia. This book was released on 2001. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the effects of informational asymmetries on the market structure of the banking industry in a multi-period model of spatial competition. In the process of lending, incumbent banks gather proprietary information about their clients, acquiring an advantage over potential entrants. We show that these informational asymmetries are important determinants of the industry structure and of banks' strategic behavior. Contrary to traditional models of horizontal differentiation, the steady-state equilibrium is characterized by a finite number of banks even in the absence of exogenous fixed costs. In addition, less concentrated industry structures may be associated with higher interest rates.

Banks, Informal Money Lenders and Asymmetric Information

2012-05 Business & Economics
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Release : 2012-05
Genre : Business & Economics
Kind : eBook
Book Rating : 865/5 ( reviews)

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Book Synopsis Banks, Informal Money Lenders and Asymmetric Information by : Patrick Avato

Download or read book Banks, Informal Money Lenders and Asymmetric Information written by Patrick Avato. This book was released on 2012-05. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2005 in the subject Economics - Monetary theory and policy, grade: A= 1,0, Johns Hopkins University (School of Advanced International Studies (SAIS)), course: Theories and Models of Economic Development, 29 entries in the bibliography, language: English, abstract: Credit markets in developing countries differ substantially from their counterparts in OECD countries. Apart from the obvious differences in institutional development, technology and productivity which are both measures for and causes of underdevelopment, typ ical LDC credit markets have two main characteristics. Firstly, their financial systems are very small compared those in industrial economies. Secondly, developing countries are characterized by very big informal financial sectors that coexist with formal credit institutions. Interestingly, credit contracts differ highly between these two sectors and there seems to be only very limited inter-sector competition. The following paper ventures to explain the persistence of these peculiarities in rural credit markets1 using the model of asymmetric information in credit markets developed by Stiglitz and Weiss. By applying the model specifically to LDC credit markets I show that asymmetric information is among the major reasons for the underdevelopment of rural credit markets. Building on these findings I then explain how Microfinance Institutions (MFI) have lately been able to overcome some of the problems of imperfect information and strive in markets formerly dominated by informal money lenders. The first part of this paper provides an overview of the typical characteristics of credit markets in developing countries, concentrating on the limited size of LDC credit markets and on the apparent dichotomy between formal and informal finance sectors. Then, the importance of financial systems for economic development is briefly outlined in order to explain the relevance of the topic of this essay. The main part of the paper then pre

Asymmetric informations and the market structure of banking industry

1998
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Release : 1998
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Kind : eBook
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Book Synopsis Asymmetric informations and the market structure of banking industry by : Giovanni Dell'Arriccia

Download or read book Asymmetric informations and the market structure of banking industry written by Giovanni Dell'Arriccia. This book was released on 1998. Available in PDF, EPUB and Kindle. Book excerpt:

Asymmetric Information, Corporate Finance, and Investment

2009-05-15 Business & Economics
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Release : 2009-05-15
Genre : Business & Economics
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Book Rating : 942/5 ( reviews)

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Book Synopsis Asymmetric Information, Corporate Finance, and Investment by : R. Glenn Hubbard

Download or read book Asymmetric Information, Corporate Finance, and Investment written by R. Glenn Hubbard. This book was released on 2009-05-15. Available in PDF, EPUB and Kindle. Book excerpt: In this volume, specialists from traditionally separate areas in economics and finance investigate issues at the conjunction of their fields. They argue that financial decisions of the firm can affect real economic activity—and this is true for enough firms and consumers to have significant aggregate economic effects. They demonstrate that important differences—asymmetries—in access to information between "borrowers" and "lenders" ("insiders" and "outsiders") in financial transactions affect investment decisions of firms and the organization of financial markets. The original research emphasizes the role of information problems in explaining empirically important links between internal finance and investment, as well as their role in accounting for observed variations in mechanisms for corporate control.

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