Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185835 
Year of Publication: 
2017
Series/Report no.: 
WWZ Working Paper No. 2017/15
Publisher: 
University of Basel, Center of Business and Economics (WWZ), Basel
Abstract: 
We establish that a monopoly bank never uses collateral as a screening device. A pooling equilibrium always exists in which all borrowers pay the same interest rate and put zero collateral. Absence of screening leads to socially inefficient lending in the sense that some socially productive firms are denied credit due to excessively high interest rate.
Subjects: 
monopoly bank
credit
contracts
screening
pooling
collateral
JEL: 
G21
D82
L12
D00
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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