Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22794 
Authors: 
Year of Publication: 
2005
Series/Report no.: 
Volkswirtschaftliche Diskussionsreihe No. 271
Publisher: 
Universität Augsburg, Institut für Volkswirtschaftslehre, Augsburg
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

Files in This Item:
File
Size
319.63 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.