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Title:The banking firm: the role of signaling with collaterals PDF Logo
Authors:Bieta, Volker
Broll, Udo
Siebe, Wilfried
Issue Date:2008
Series/Report no.:Dresden discussion paper series in economics 04/08
Abstract:In this paper we challenge basic results of signaling models. In our banking model each project of a borrower is described by a continuous density of outcomes. Different density functions are classified according to second stochastisch dominance. Combining these features we find that in a banking model collateral is no longer in a position to signal the degree of riskiness of the borrower to the lender. In most cases the equilibrium is a pooling equilibrium.
Subjects:Signaling
collateral
perfect Bayesian equilibrium
JEL:D8
G20
Document Type:Working Paper
Appears in Collections:Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden

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