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In deciding whether to roll over a loan, a relationship bank that has imperfect private information about its borrowers faces a trade-off. It wants to avoid rolling over a loan to a bad firm so as to safeguard its reputation as an effective monitor. However, refusing to roll over a loan to a...
Persistent link: https://www.econbiz.de/10013108064
The paper adds a moral hazard problem between banks and depositors as in Gertler and Karadi (2011) to a DSGE model with a costly state verification problem between entrepreneurs and banks as in Bernanke, Gertler and Girlchrist (1999, BGG). This modification amplifies the response of the external...
Persistent link: https://www.econbiz.de/10013108089
The current banking crisis highlights the challenges faced in the traditional lending model, particularly in terms of screening smaller borrowers. The recent growth in online peer-to-peer lending marketplaces offers opportunities to examine different lending models that rely on screening by...
Persistent link: https://www.econbiz.de/10013146855
We study the effects of competition on loan rates and loan portfolio quality in microcredit markets using a new database from rating agencies, covering 379 for-profit and nonprofit microfinance institutions (MFIs) in 67 countries over 2002-2008. First, we find competitive pressures from...
Persistent link: https://www.econbiz.de/10013066620
This paper is a first attempt to connect the heterogeneity in bank efficiency with lending fluctuations and allocation efficiency : there is a trade-off between the two in the presence of heterogeneity in bank monitoring efficiency. The mechanism at hand is twofold. (a) First the rent extracted...
Persistent link: https://www.econbiz.de/10013072408
This paper is a first attempt to connect the heterogeneity in bank efficiency with lending fluctuations and allocation efficiency: there is a trade-off between the two in the presence of heterogeneity in bank monitoring efficiency. The mechanism at hand is twofold: (a) First the rent extracted...
Persistent link: https://www.econbiz.de/10013061515
This paper studies how information frictions in the securitization market amplify the response of mortgage credit supply to house price shocks. We model securitization as an optimal contracting problem between investors and banks. Banks are better informed than investors about the quality of the...
Persistent link: https://www.econbiz.de/10014353993
-liability (JL) to individual liabil- ity (IL) lending models. This article tests a theory explaining this shift, focusing on …
Persistent link: https://www.econbiz.de/10015271329
This paper examines whether methodological deficiencies in the literature on discrimination in small business credit markets have a significant impact on the estimation of discrimination and provides a preliminary investigation into the causes of discrimination in these markets. We find...
Persistent link: https://www.econbiz.de/10013126685
This paper empirically examines the role of soft information in the competitive interaction between relationship and transaction banks. Soft information can be interpreted as a private signal about the quality of a firm that is observable to a relationship bank, but not to a transaction bank. We...
Persistent link: https://www.econbiz.de/10010225815