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and banks have private information, what is the optimal way to settle debts? I develop a dynamic model with micro … contract at the presence of private information. Market prices fully reveal the aggregate states and help solve the incentive … problem of the bank. Secondly, it is optimal for the bank to require loans be settled with short-term inside money, i.e., bank …
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By applying factor analysis to unique data on loan screening for small and medium-sized enterprises (SMEs) in Japan, we investigate the factors that banks actually evaluate when underwriting commercial loans. We find that banks emphasize three factors when they decide whether to grant loans: the...
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