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On the Incentive Problems in Financial Conglomerates

Lóránth, Gyöngyi - C.E.P.R. Discussion Papers - 2002

This paper analyses the effects of scope expansion on the core activity of banks and provides a rationale for their interest in offering a wider product range. We show that scope economies may stem from moral hazard in the core business, and argue that a cost of scope expansion might be the...

Persistent link: https://www.econbiz.de/10005791861

Bank Diversification and Incentives

Lóránth, Gyöngyi; Morrison, Alan - C.E.P.R. Discussion Papers - 2008

This paper analyzes the consequences of bank diversification into fee-based businesses. Universal banks raise welfare by expanding the range of services available to entrepreneurs. However, because they may choose to rescue failed entrepreneurs in order to sell them fee-based financial services,...

Persistent link: https://www.econbiz.de/10005792170

Relative Performance Equilibrium in Financial Markets

Palomino, Frédéric - C.E.P.R. Discussion Papers - 1998

Money management is an activity in which agents are often evaluated on the basis of their relative performance. In this article we consider an oligopolistic market in which some informed fund managers aim at maximizing their relative performance, rather than their absolute performance. First, we...

Persistent link: https://www.econbiz.de/10005662150

Adverse Selection of Investment Projects and the Business Cycle

Reichlin, Pietro; Siconolfi, Paolo - C.E.P.R. Discussion Papers - 1997

In an economy where entrepreneurs with unequal ‘abilities’ face alternative investment projects, which differ in their degree of risk and productivity, we analyse the Nash equilibrium contracts arising from a banks-borrowers game in the context of asymmetric information. We show that, for a...

Persistent link: https://www.econbiz.de/10005666565

Insider Trading in Credit Derivatives

Acharya, Viral V; Johnson, Tim - C.E.P.R. Discussion Papers - 2005

Insider trading in the credit derivatives market has become a significant concern for regulators and participants. This paper attempts to quantify the problem. Using news reflected in the stock market as a benchmark for public information, we report evidence of significant incremental...

Persistent link: https://www.econbiz.de/10005666591

The Microstructure of Stock Markets

Biais, Bruno; Glosten, Larry; Spatt, Chester S - C.E.P.R. Discussion Papers - 2002

We survey the literature analysing the price formation and trading process, and the consequences of market organization for price discovery and welfare. We develop a united perspective on theoretical, empirical and experimental approaches. We discuss the evidence on transaction costs and the...

Persistent link: https://www.econbiz.de/10005788974

Optimal Debt Contracts and Moral Hazard Along the Business Cycle

Reichlin, Pietro; Siconolfi, Paolo - C.E.P.R. Discussion Papers - 2000

We analyse the Pareto optimal contracts between lenders and borrowers in a model with asymmetric information. The model is a generalization of the Rothschild-Stiglitz pure adverse selection problem to include moral hazard with limited liability contracts. Entrepreneurs with unequal ``abilities"...

Persistent link: https://www.econbiz.de/10005656342

Informational Efficiency of Credit Default Swap and Stock Markets: The Impact of Credit Rating Announcements

Norden, Lars; Weber, Martin - C.E.P.R. Discussion Papers - 2004

This Paper analyses the response of stock and credit default swap (CDS) markets to rating announcements by the three major rating agencies during 2000-02. Applying event study methodology, we examine whether and how strongly these markets respond to rating announcements in terms of abnormal...

Persistent link: https://www.econbiz.de/10005656462

The Ownership of Ratings

Faure-Grimaud, Antoine; Peyrache, Eloïc; Quesada, Lucía - C.E.P.R. Discussion Papers - 2005

uncertain of their quality at the time of hiring a certification intermediary and if the decision to get a rating is not …

Persistent link: https://www.econbiz.de/10005067394

Underpricing, Ownership and Control in Initial Public Offerings of Equity Securities in the UK

Brennan, Michael J; Franks, Julian R - C.E.P.R. Discussion Papers - 1995

) and how the underpricing of the issue can be used by insiders to retain control. Using data from a sample of 69 IPOs in … the United Kingdom, we argue that IPO underpricing is used to ensure over-subscription and rationing in the share … the greater the underpricing, the smaller the size of new blocks assembled after the IPO. …

Persistent link: https://www.econbiz.de/10005666807

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