Endogenous information revelation in a competitive credit market and credit crunch |
| |
| Institution: | 1. University of Bielefeld, Germany;2. University Paris 1 Pantheon-Sorbonne, France;3. Paris School of Economics, University Paris 1 Pantheon-Sorbonne, France;1. Department of Economics and Management, Université de Cergy-Pontoise & THEMA,Cergy-Pontoise, 95011, France;2. Department of Economics, University of Georgia, Athens, GA, 30602, USA;1. International Business School Suzhou, Xi’an Jiaotong-Liverpool University, Jiangsu 215123, China;2. Department of Economics, Ryerson University, Toronto, Ontario M5B 2K3, Canada;1. Paris School of Economics - University Paris 1, CES, 106 bd de l’Hopital, 75013, Paris, France;2. MIA, University of La Rochelle, Avenue Michel Crepeau, 47042, La Rochelle, France;3. University of Leiden, P.O. Box 9512, 2300 RA Leiden, The Netherlands |
| |
| Abstract: | In this paper, we propose a new mechanism able to explain the occurrence of credit crunches. Considering a credit market with an asymmetry of information between borrowers and lenders, we assume that borrowers have to pay a cost to reveal information on the quality of their project. They decide to be transparent if it is necessary for getting a loan or for paying a lower interest rate. Two types of competitive equilibria may exist: an opaque equilibrium in which all projects receive funding without revealing information; a transparent one in which only the best projects reveal information and receive funding. It is also possible to get multiple equilibria. Incorporating this microeconomic mechanism in an OLG model, the economy may experience fluctuations due to the change of regime, and indeterminacy may occur. |
| |
| Keywords: | Credit crunch Endogenous information revelation |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
