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Credit from the Monopoly Bank

Lengwiler, Yvan and Rishabh, Kumar. (2017) Credit from the Monopoly Bank. WWZ Working Papers, 2017 (15).

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Official URL: https://edoc.unibas.ch/61303/

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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
UniBasel Contributors:Lengwiler, Yvan and Rishabh, Kumar
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:29
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2017/15
Last Modified:07 Mar 2018 11:52
Deposited On:07 Mar 2018 11:52

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