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Abstract
It has been argued that competing banks make inefficiently frequent use of collateralization in situations where they are better able to evaluate a project's risk than entrepreneurs. We study the bank's choice between screening and collateralization in a model where banks do not have this superior screening skill. In particular, we study the effect of bank competition on this choice. We find that competing banks use collateral less often than a monopolistic bank because competition will intensify if both banks collateralize. Moreover, bank competition is welfare improving if collateralization is rather costly.
| Dokumententyp: | Paper |
|---|---|
| Keywords: | Collateralization, screening, incentives, bank competition |
| Fakultät: | Volkswirtschaft
Volkswirtschaft > Munich Discussion Papers in Economics Volkswirtschaft > Munich Discussion Papers in Economics > Finanzmärkte Volkswirtschaft > Munich Discussion Papers in Economics > Informationsökonomik Volkswirtschaft > Lehrstühle > Seminar für Komparative Wirtschaftsforschung |
| Themengebiete: | 300 Sozialwissenschaften > 300 Sozialwissenschaft, Soziologie
300 Sozialwissenschaften > 330 Wirtschaft |
| JEL Classification: | D82, G21, K00 |
| URN: | urn:nbn:de:bvb:19-epub-2007-0 |
| Sprache: | Englisch |
| Dokumenten ID: | 2007 |
| Datum der Veröffentlichung auf Open Access LMU: | 02. Aug. 2007 |
| Letzte Änderungen: | 04. Nov. 2020, 14:11 |
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