Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93974
Authors: 
Hainz, Christa
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 216
Abstract: 
It has been argued that competing banks make inefficiently frequent use of collateralization in situations where they are better able to evaluate a project's risk than entrepreneurs. We study the bank's choice between screening and collateralization in a model where banks do not have this superior screening skill. In particular, we study the effect of bank competition on this choice. We find that competing banks use collateral less often than a monopolistic bank because competition will intensify if both banks collateralize. Moreover, bank competition is welfare improving if collateralization is rather costly.
Subjects: 
collateralization
screening
incentives
bank competition
JEL: 
D82
G21
K00
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





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