compensation. The model combines multitasking and screening, embedded into a Hotelling-like framework. Competition for the most …

We analyze a standard environment of adverse selection in credit markets. In our environment, entrepreneurs who are …

competition affects the efficiency of credit allocation; monitoring of firms; and the firms' restructuring effort. In our model …, banks compete to finance an investment project with uncertain return. By screening the firm a bank learns about its … profitability. Surprisingly, it is found that an increase in bank competition need not reduce a bank's screening incentive even …

We analyze the effect of loan sales on the intensity of costly screening. Loan sales strengthen screening incentives … when screening primarily improves the bank’s ability to identify profitable loans and when banks retain most of those … profitable loans. However, loan sales dampen screening incentives when the benefit of screening primarily helps to weed out …