Financial intermediation and equity investment with costly monitoring

This paper studies the efficiency of equilibria in a productive OLG economy where the process of financial intermediation is characterized by costly state verification. Both competitive equilibria and Constrained Pareto Optimal allocations are characterized. It is shown that market outcomes can be socially inefficient, even when a weaker notion than Pareto optimality is considered.

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Year of publication:	1999-09
Authors:	Giorgio, Giorgio Di
Institutions:	Department of Economics and Business, Universitat Pompeu Fabra
Subject:	Financial intermediation \| costly state verification \| Constrained Pareto Optimality

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Extent:	application/pdf
Series:	Economics Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Classification:	E44 - Financial Markets and the Macroeconomy ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005704966