conduct investigations in the search of qualified loan borrowers. The model assumes that the domestic bank has a cost … advantage in evaluating a borrower’s credit quality compared to the competing foreign bank. Despite the cost heterogeneity, an … equilibrium exists in which two such banks coexist in the market. Specifically, the information cost advantaged bank orchestrates …

driven lower by competition. Thus, a bank facing an entry threat is more likely to invest in screening instead of relying on … bank loan quality. It shows that if a banking market is liberalized, the opportunity cost of screening loan applicants is … collateral requirements. Removing entry restrictions may improve loan quality stability and reduce correlation between bank …

public disclosure of stress test results, raise funding by promising investors a repayment. We show that competition forces … of bank failure is sufficiently large, the surplus as well. Our results in overall highlight the need to take into …