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Volkswirtschaftliche Diskussionsreihe, Universität Augsburg >
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http://hdl.handle.net/10419/22794
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| Title: | | Credit Risk, Credit Rationing, and the Role of Banks: The Case of Risk Averse Lenders  |
| Authors: | | Pausch, Thilo |
| Issue Date: | | 2005 |
| Series/Report no.: | | Volkswirtschaftliche Diskussionsreihe / Institut für Volkswirtschaftslehre der Universität Augsburg 271 |
| Abstract: | | The standard situation of ex post information asymmetry between borrowers and lenders is extended by risk aversion and heterogenous levels of reservation utility of lenders. In a situation of direct contracting optimal incentive compatible contracts are valuable for both, borrowers and lenders. However, there may appear credit rationing as a consequence of borrowers optimal decision making. Introducing a bank into the market increases total wealth due to the appearance of a portfolio effect in the sense of first order stochastic dominance. It can be shown that this effect may even reduce the problem of credit rationing provided it is su?ciently strong. |
| Subjects: | | risk aversion costly state verification credit rationing bank |
| JEL: | | L22 G21 D82 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Volkswirtschaftliche Diskussionsreihe, Universität Augsburg
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