Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical … financing high-risk borrowers at very high rates. …

order to provide a rationale for these observations, we present a model with perfectly competitive banks and risk averse … default penalties increase, the level of student risk aversion proves crucial in determining the market outcome. If risk … student risk aversion is high, high ability students are separated and student loan contracts involve a limited amount of …

risky labour-market outcomes, adverse selection, moral hazard and risk aversion. The model combines structured student loans … (redistribution). In separating optima, the talented types bear more risk than the less-talented ones; they arise only if the social …

risk in which all banks choose inefficiently high leverage to fund correlated assets and market discipline is compromised …

positive profits and the opposite of adverse selection with regard to risk types can sometimes be observed empirically. …