The information asymmetry between the borrower and the lender is a well-studied issue in the credit contracts. Various mechanisms (credit rationing, short-term debt, relationship banking, collateralization) have been discussed in the literature to reduce the asymmetry. This paper examines the...

The information asymmetry between the borrower and the lender is a well-studied issue in the credit contracts. Various mechanisms (credit rationing, short-term debt, relationship banking, collateralization) have been discussed in the literature to reduce the asymmetry. This paper examines the...

We investigate, theoretically and empirically, the relationship between monetary policy and the term structure of interest rates. In particular, we show in a dynamic macroeconomic model that if monetary policy reveals information about economic developments, interest rates of all maturities move...