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On September 15, 2008, Lehman Brothers Inc. announced their filing for bankruptcy. The reaction of Lehman's competitors and market participants to this bankruptcy filing announcement provides a unique field experiment of how the insolvency spills over to other financial institutions and how...
Persistent link: https://www.econbiz.de/10011083604
We analyze the effect of loan sales on the intensity of costly screening. Loan sales strengthen screening incentives when screening primarily improves the bank’s ability to identify profitable loans and when banks retain most of those profitable loans. However, loan sales dampen screening...
Persistent link: https://www.econbiz.de/10011083726
We apply a reduced form representation of product market competition, facilitating an explicit characterization of the equilibrium investments in consumer-specific screening. The effects of market structure on screening incentives depend on the microstructure of the imperfect screening...
Persistent link: https://www.econbiz.de/10011083825
Using a new daily dataset for all stocks traded on the New York Stock Exchange, we study the impact of information asymmetry during the liquidity freeze and market run of October 1907 - one of the most severe financial crises of the 20th century. We estimate that the run on the market increased...
Persistent link: https://www.econbiz.de/10011207393
Using a new daily dataset for all stocks traded on the New York Stock Exchange from 1905 to 1910, we provide the first in-depth, microstructure analysis of the Panic of 1907 - one of the most severe financial crises of the 20th century - and quantify the critical role of asymmetric information...
Persistent link: https://www.econbiz.de/10011241627
We design an asymmetric duopoly model with inherited market dominance such that the dominant firm and the smaller firm can price discriminate based on consumers’ purchase history. We show that uniform pricing softens competition leading to higher industry profits than under history-based...
Persistent link: https://www.econbiz.de/10010866144
In a market with stochastic demand with seller competition at most one seller can acquire costly information about demand. Other sellers entertain idiosyncratic beliefs about the market demand and the probability that an informed seller is trading in the market. These idiosyncratic beliefs...
Persistent link: https://www.econbiz.de/10011001853
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Corporate income taxation and prudential regulation are complementary instruments for public policy in banking markets. The common deductibility of interest payments induces debt bias and causes banks to be excessively levered. A reduction in debt-bias can achieve two goals at the same time: It...
Persistent link: https://www.econbiz.de/10015173477