Financial intermediation and endogenous risk in the banking sector

Eckwert B, Broll U, Eickhoff A (2012)
Economic Modelling 29(5): 1618-1622.

Journal Article | Published | English

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The paper revisits the impact of uncertainty on the decision problem of a bank. The bank extends risky loans to private investors and sells deposits to savers at fixed rates. The uncertainty under which deposit/loan-portfolios are chosen by banks is endogenized through an information system that conveys public signals about the return distribution of bank loans. Transparency in the banking sector is defined in terms of the reliability of these signals. We find that higher transparency always raises expected bank profits, but may lead to a higher or lower expected loan volume. Moreover, higher transparency may reduce economic welfare. (C) 2012 Elsevier B.V. All rights reserved.
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Eckwert B, Broll U, Eickhoff A. Financial intermediation and endogenous risk in the banking sector. Economic Modelling. 2012;29(5):1618-1622.
Eckwert, B., Broll, U., & Eickhoff, A. (2012). Financial intermediation and endogenous risk in the banking sector. Economic Modelling, 29(5), 1618-1622.
Eckwert, B., Broll, U., and Eickhoff, A. (2012). Financial intermediation and endogenous risk in the banking sector. Economic Modelling 29, 1618-1622.
Eckwert, B., Broll, U., & Eickhoff, A., 2012. Financial intermediation and endogenous risk in the banking sector. Economic Modelling, 29(5), p 1618-1622.
B. Eckwert, U. Broll, and A. Eickhoff, “Financial intermediation and endogenous risk in the banking sector”, Economic Modelling, vol. 29, 2012, pp. 1618-1622.
Eckwert, B., Broll, U., Eickhoff, A.: Financial intermediation and endogenous risk in the banking sector. Economic Modelling. 29, 1618-1622 (2012).
Eckwert, Bernhard, Broll, Udo, and Eickhoff, Andreas. “Financial intermediation and endogenous risk in the banking sector”. Economic Modelling 29.5 (2012): 1618-1622.
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