Lengwiler, Yvan and Rishabh, Kumar. (2017) Credit from the Monopoly Bank. WWZ Working Papers, 2017 (15).
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Abstract
We establish that a monopoly bank never uses collateral as a screening device. A pooling equilibrium always exists in which all borrowers pay the same interest rate and put zero collateral. Absence of screening leads to socially inefficient lending in the sense that some socially productive firms are denied credit due to excessively high interest rate.
Faculties and Departments: | 06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Finanzmärkte (Lengwiler) 12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers |
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UniBasel Contributors: | Lengwiler, Yvan and Rishabh, Kumar |
Item Type: | Working Paper |
Publisher: | WWZ Forum |
Number of Pages: | 29 |
Note: | Publication type according to Uni Basel Research Database: Discussion paper / Internet publication |
Language: | English |
Identification Number: |
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edoc DOI: | |
Last Modified: | 16 Aug 2019 14:24 |
Deposited On: | 07 Mar 2018 11:52 |
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