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This paper provides a simple model showing that the extent of competition in credit markets is important in determining …
Persistent link: https://www.econbiz.de/10012788596
competition between traditional banks and challenger fintech entrants. We study lending market competition when sharing banks …
Persistent link: https://www.econbiz.de/10013405502
We report the results of a randomized field experiment that examines the credit market impacts of improvements in a lender's ability to determine borrowers' identities. Improved personal identification enhances the credibility of a lender's dynamic repayment incentives by allowing it to withhold...
Persistent link: https://www.econbiz.de/10013067377
We show that stricter bank liquidity standards can trigger unintended credit booms when there is heterogeneity in interbank pricing power. Attempts to circumvent the regulation change the allocation of savings across institutions, eliciting strategic responses that also change the allocation of...
Persistent link: https://www.econbiz.de/10013001209
Two hypotheses concerning firms issuing debt for the first time are tested. The first is that new firms' debt will be discounted more heavily by lenders, compared to firms which have credit histories (but are otherwise identical), and that this excess discount declines over time as lenders...
Persistent link: https://www.econbiz.de/10014073966
Credit market freezes in which debt issuance declines dramatically and market liquidity evaporates are typically observed during financial crises. In the financial crisis of 2008-09, the structured credit market froze, issuance of corporate bonds declined, and secondary credit markets became...
Persistent link: https://www.econbiz.de/10012954001
This paper develops a model of a self-fulfilling credit market freeze and uses it to study alternative governmental responses to such a crisis. We study an economy in which operating firms are interdependent, with their success depending on the ability of other operating firms to obtain...
Persistent link: https://www.econbiz.de/10013142939
Standard economic theory says that unsecured, high-interest, short-term debt — such as borrowing via credit cards and …
Persistent link: https://www.econbiz.de/10012861728
Poor loan quality is often attributed to loan officers exercising poor judgment. A potential solution is to base loans on hard information alone. However, we find other consequences of bypassing discretion stemming from loan officer incentives and limits of hard information verifiability. Using...
Persistent link: https://www.econbiz.de/10013081841
We design a randomized controlled trial to evaluate the adoption of credit scoring with a bank that uses soft information in small businesses lending. We find that credit scores improve the productivity of credit committees, reduce managerial involvement in the loan approval process, and...
Persistent link: https://www.econbiz.de/10013063295