Title: Vertical differentiation, asymmetric information and endogenous bank screening
Authors: Hyytinen, Ari ×
Toivanen, Otto #
Issue Date: 9-Apr-2004
Publisher: Berkeley Electronic Press
Series Title: The Journal in Theoretical Economics vol:4 issue:1 pages:Chap 5-Art 5
Article number: 5
Abstract: In a model of bank lending characterized by asymmetric information, we show that banks may use an interim monitoring technology strategically to soften price competition, even though the borrowers face no moral hazard problem. The interim monitoring technology can also be used to alleviate adverse selection. The equilibria that emerge resemble those in vertical product differentiation models. We also show that because of the strategic use of interim monitoring, a bank may forego the use of a costless and perfect ex-ante screening technology.
Description: Originally published in Topics in Theoretical Economics.
ISSN: 1935-1704
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Non-KU Leuven Association publications
× corresponding author
# (joint) last author

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