scholarly journals Asymmetric Information and Imperfect Competition in Lending Markets

2018 ◽  
Vol 108 (7) ◽  
pp. 1659-1701 ◽  
Author(s):  
Gregory S. Crawford ◽  
Nicola Pavanini ◽  
Fabiano Schivardi
Keyword(s):  
Asymmetric Information ◽  
Market Power ◽  
Adverse Selection ◽  
Imperfect Competition ◽  
Structural Model ◽  
Negative Effects ◽  
Credit Supply ◽  
Lines Of Credit ◽  
Credit Demand ◽  
Firm Default

We study the effects of asymmetric information and imperfect competition in the market for small business lines of credit. We estimate a structural model of credit demand, loan use, pricing, and firm default using matched firm-bank data from Italy. We find evidence of adverse selection in the form of a positive correlation between the unobserved determinants of demand for credit and default. Our counterfactual experiments show that while increases in adverse selection increase prices and defaults on average, reducing credit supply, banks’ market power can mitigate these negative effects. (JEL D22, D82, G21, G32, L13, L25)

scholarly journals Sequential Markets, Market Power, and Arbitrage

2016 ◽  
Vol 106 (7) ◽  
pp. 1921-1957 ◽  
Author(s):  
Koichiro Ito ◽  
Mar Reguant
Keyword(s):  
Market Power ◽  
Electricity Market ◽  
Imperfect Competition ◽  
Strategic Behavior ◽  
Structural Model ◽  
Firm Behavior ◽  
Welfare Effects ◽  
Price Premium ◽  
Model Predictions ◽  
Price Differences

We develop a framework to characterize strategic behavior in sequential markets under imperfect competition and restricted entry in arbitrage. Our theory predicts that these two elements can generate a systematic price premium. We test the model predictions using microdata from the Iberian electricity market. We show that the observed price differences and firm behavior are consistent with the model. Finally, we quantify the welfare effects of arbitrage using a structural model. In the presence of market power, we show that full arbitrage is not necessarily welfare-enhancing, reducing consumer costs but increasing deadweight loss. (JEL D42, D43, L12, L13, L94, Q41)

AGENCY PROBLEM DALAM PENERAPAN PEMBIAYAAN AKAD MUDHARABAH PADA PERBANKAN SYARIAH

ALQALAM ◽  
2016 ◽  
Vol 33 (1) ◽  
pp. 46
Author(s):  
Aswadi Lubis
Keyword(s):  
High Risk ◽  
Asymmetric Information ◽  
Human Resources ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Agency Problem ◽  
Agency Problems ◽  
Islamic Banking ◽  
The Public

The purpose of writing this article is to describe the agency problems that arise in the application of the financing with mudharabah on Islamic banking. In this article the author describes the use of the theory of financing, asymetri information, agency problems inside of financing. The conclusion of this article is that the financing is asymmetric information problems will arise, both adverse selection and moral hazard. The high risk of prospective managers (mudharib) for their moral hazard and lack of readiness of human resources in Islamic banking is among the factors that make the composition of the distribution of funds to the public more in the form of financing. The limitations that can be done to optimize this financing is among other things; owners of capital supervision (monitoring) and the customers themselves place restrictions on its actions (bonding).

Asymmetric information, adverse selection, and the pricing of CMBS☆

2011 ◽  
Vol 100 (2) ◽  
pp. 304-325 ◽  
Author(s):  
Xudong An ◽  
Yongheng Deng ◽  
Stuart A. Gabriel
Keyword(s):  
Asymmetric Information ◽  
Adverse Selection

scholarly journals How does corporate voluntary disclosure affect asymmetric information and adverse selection?

2015 ◽  
Vol 12 (2) ◽  
pp. 413-425 ◽  
Author(s):  
Amal Hamrouni ◽  
Anthony Miloudi ◽  
Ramzi Benkraiem
Keyword(s):  
Asymmetric Information ◽  
Adverse Selection ◽  
Voluntary Disclosure ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Annual Reports ◽  
Strategic Information ◽  
Information Measures ◽  
Adverse Selection Costs ◽  
Bid Ask Spreads

This paper investigates whether the extent of corporate voluntary disclosure mitigates asymmetric information and adverse selection in the Euronext Paris stock exchange. We apply a disclosure index as a proxy for the extent of voluntary disclosure and use different spread measures to estimate both asymmetric information and adverse selection. Our findings show a negative relationship between the disclosure index and asymmetric information and adverse selection proxies. An analysis of sub-indexes provides additional mixed results. Several asymmetric information measures are negatively related to the volume of financial, non-financial and voluntary governance information in corporate annual reports. Nevertheless, the effect of strategic information volume is statistically significant only for effective bid-ask spreads. On the whole, these results are consistent with the view that high corporate voluntary disclosure is associated with narrow spreads and low adverse selection costs

scholarly journals An explanation of the profitability and market power of marginalized microenterprises

2017 ◽  
Vol 10 (1) ◽  
pp. 1987-1994
Author(s):  
Natanael Ramírez ◽  
Alejandro Mungaray ◽  
José G. Aguilar ◽  
Ramón Inzunza
Keyword(s):  
Market Power ◽  
Imperfect Competition ◽  
Econometric Model ◽  
Operating Conditions ◽  
Socioeconomic Conditions ◽  
Marginal Costs ◽  
Qualitative Variables ◽  
Productive Process ◽  
Pricing Power ◽  
Area Of Influence

This paper analyzes the behavior of marginalized microenterprises under an imperfect competition framework, where said economic units are capable of fixing a price above their marginal costs which allows them to survive and even be profitable despite their typical operating conditions. To prove this, we use an econometric model that considers the Lerner index as a variable dependent on a set of qualitative variables previously classified in accordance to their area of influence. We conclude that these microenterprises are capable of being profitable and operate with market power through their advertising and sales strategies and the flexibility in their productive process. In any case the pricing power is highly influenced by the socioeconomic conditions of the market in which it operates.

Credit Stimulus, Executive Ownership, and Firm Leverage

2021 ◽  
Author(s):  
Rajdeep Chakraborti ◽  
Sandeep Dahiya ◽  
Lei Ge ◽  
Pedro Gete
Keyword(s):  
Banking Sector ◽  
Chinese Government ◽  
Bank Capital ◽  
Credit Expansion ◽  
Complete Control ◽  
Credit Supply ◽  
Credit Demand ◽  
Firm Leverage

We show that executive ownership is a significant driver of the demand for credit following credit expansion policies. Our focus on credit demand is in contrast to most studies that have focused on credit supply factors such as bank capital. Our identification exploits the large and unexpected Chinese credit expansion in 2008. This setting offers a unique advantage as in 2008 the Chinese government had almost complete control over the banking sector and it directed the banks to increase credit supply. Thus, in this setting, demand, rather than supply, largely drives the observed changes in firms’ borrowing. We provide extensive robustness tests to validate our results. This paper was accepted by Kay Giesecke, finance.

Asymmetric Information, Market Power, and the Underpricing of New Stock Issues in Germany, 1882–1892

2010 ◽  
Vol 70 (3) ◽  
pp. 630-656 ◽  
Author(s):  
Caroline Fohlin
Keyword(s):  
Asymmetric Information ◽  
Market Power ◽  
Market Share ◽  
Agency Problems ◽  
Information Market ◽  
Nonfinancial Firms

Investors in new stock issues in Germany in the 1880s experienced low spreads between the price they paid for stock and the price at which they could sell the stock in the market. Stock issuing companies paid substantial fees to underwriting banks, and these costs increased with the underwriter's market share. Bank's faced lower issuing costs than did nonfinancial firms. These patterns are consistent with a situation in which underwriters exploited their access to better information (agency problems) and had market power, but do not support the supposed lemons problems that motivated the imposition of stringent regulations in 1896.

scholarly journals Globalisation and concentration in the Czech agro-food sector

2012 ◽  
Vol 48 (No. 2) ◽  
pp. 76-80
Author(s):  
T. Doucha
Keyword(s):  
Market Structure ◽  
Market Power ◽  
Information Sources ◽  
Developed Countries ◽  
Food Chains ◽  
Negative Effects ◽  
Food Sector ◽  
Institutional Aspects ◽  
The Individual ◽  
The Eu

The processes of globalisation and concentration have been also penetrating into the Czech agro-food sector and market. Utilising information from foreign sources and developed countries, the paper tries to present a complex view on the Czech situation from the structural and institutional aspects. Based on limited Czech information sources, the market structure in the individual links of the food chains is presented, together with the hypothesis about the sequence of the market power in the present Czech agro-food sector: input suppliers and retailers – farmers – processors. The paper also implies possibilities of the state to suppress negative effects of globalisation and concentration, especially as regards the adjustment of the Czech market regulations to the EU ones.

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