Endogenous information revelation in a competitive credit market and credit crunch

Li Y, Wigniolle B (2017)
JOURNAL OF MATHEMATICAL ECONOMICS 68: 127-141.

Zeitschriftenaufsatz | Veröffentlicht | Englisch
 
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Autor/in
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Abstract / Bemerkung
In this paper, we propose a new mechanism able to explain the occurrence of credit crunches. Considering a credit market with an asymmetry of information between borrowers and lenders, we assume that borrowers have to pay a cost to reveal information on the quality of their project. They decide to be transparent if it is necessary for getting a loan or for paying a lower interest rate. Two types of competitive equilibria may exist: an opaque equilibrium in which all projects receive funding without revealing information; a transparent one in which only the best projects reveal information and receive funding. It is also possible to get multiple equilibria. Incorporating this microeconomic mechanism in an OLG model, the economy may experience fluctuations due to the change of regime, and indeterminacy may occur. (C) 2016 Elsevier B.V. All rights reserved.
Stichworte
Credit crunch; Endogenous information revelation
Erscheinungsjahr
2017
Zeitschriftentitel
JOURNAL OF MATHEMATICAL ECONOMICS
Band
68
Seite(n)
127-141
ISSN
0304-4068
Page URI
https://pub.uni-bielefeld.de/record/2908534

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Li Y, Wigniolle B. Endogenous information revelation in a competitive credit market and credit crunch. JOURNAL OF MATHEMATICAL ECONOMICS. 2017;68:127-141.
Li, Y., & Wigniolle, B. (2017). Endogenous information revelation in a competitive credit market and credit crunch. JOURNAL OF MATHEMATICAL ECONOMICS, 68, 127-141. doi:10.1016/j.jmateco.2016.09.008
Li, Y., and Wigniolle, B. (2017). Endogenous information revelation in a competitive credit market and credit crunch. JOURNAL OF MATHEMATICAL ECONOMICS 68, 127-141.
Li, Y., & Wigniolle, B., 2017. Endogenous information revelation in a competitive credit market and credit crunch. JOURNAL OF MATHEMATICAL ECONOMICS, 68, p 127-141.
Y. Li and B. Wigniolle, “Endogenous information revelation in a competitive credit market and credit crunch”, JOURNAL OF MATHEMATICAL ECONOMICS, vol. 68, 2017, pp. 127-141.
Li, Y., Wigniolle, B.: Endogenous information revelation in a competitive credit market and credit crunch. JOURNAL OF MATHEMATICAL ECONOMICS. 68, 127-141 (2017).
Li, Yuanyuan, and Wigniolle, Bertrand. “Endogenous information revelation in a competitive credit market and credit crunch”. JOURNAL OF MATHEMATICAL ECONOMICS 68 (2017): 127-141.