Coco, Giuseppe; Meza, David De; Pignataro, Giuseppe; … - Dipartimento di Scienze per l'Economia e l'Impresa, … - 2012
Can a bank increase its profi
t by subsidizing inactivity? This paper suggests this may occur, due to the presence of hidden information, in a monopolistic credit market. Rather than offering credit in a pooling contract, a monopolist bank can sort borrowers through an appropriate subsidy to...