We show that multi-bank loan pools improve the risk-return profile of banks ̕loan business. Banks write simple contracts on the proceeds from pooled loan portfolios, taking into account the free-rider problems in joint loan production. Thus, banks benefit greatly from diversifying credit risk...

We show that multi-bank loan pools improve the risk-return profile of banks' loan business. Banks write simple contracts on the proceeds from pooled loan portfolios, taking into account the free-rider problems in joint loan production. Thus, banks benefit greatly from diversifying credit risk...

The study shows that multi-bank loan pool contracts improve the risk-return profile of banks' loan business. Banks write simple contracts on the proceeds from pooled loan portfolios, taking into account the free-rider problems in joint loan production. Thereby especially smaller banks benefit...

This paper is an early response to Campbell's (2006) call to analyze the role of financial intermediaries in household finance. We first sketch a basic theory of financial advice that proceeds from cognitive errors and costly information acquisition. We then derive hypotheses about honest and...

We show that multi-bank loan pools improve the risk-return profile of regional banks' loan business. Banks write simple contracts on the proceeds from pooled loan portfolios, taking into account the agency problems in joint loan production. Thereby, banks benefit from diversifying credit risk...