Unfair credit allocations |
| |
Authors: | Giuseppe Coco Giuseppe Pignataro |
| |
Institution: | 1. Dipartimento di Studi sullo Stato, Università di Firenze, Via delle Pandette, 21, 50127, Firenze, Italy 2. Department of Economics, University of Bologna, Piazza Scaravilli, 1, 40126, Bologna, Italy
|
| |
Abstract: | This article investigates the impact of credit allocation on heterogeneous wealth entrepreneurs. We show that with decreasing risk aversion and unobservable wealth, poorer borrowers exert more effort. As a consequence of endogenous adverse selection, they are either excluded from the market or necessarily subsidize richer borrowers in a pooling equilibrium resulting in a paradoxical and inequitable redistribution. Alternatively, a less likely separating equilibrium may occur, in which poor types bear the entire weight of separation in the form of excess risk taking. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|