scholarly journals Credit guarantees in a credit market with adverse selection

2003 ◽  
Vol 12 (4) ◽  
pp. 331-349 ◽  
Author(s):  
Karel Janda
Keyword(s):  
Adverse Selection ◽  
Credit Market ◽  
Credit Guarantees

Monopolistic credit market in the conditions of imperfect information

2000 ◽  
Vol 9 (3) ◽  
Author(s):  
Karel Janda
Keyword(s):  
Imperfect Information ◽  
Credit Market ◽  
Credit Guarantees ◽  
Government Credit

Imperfect information in the monopolistic credit market could lead to the rejection of credit provision to some applicants for credit. The choice of which class of borrowers is rejected credit depends on the relations among some characteristics of borrowers. The inefficiency of credit market could be alleviated by government credit guarantees.

Is there adverse selection in the credit market?

2001 ◽  
Vol 3 (3) ◽  
pp. 215-238 ◽  
Author(s):  
Robert Cressy ◽  
Otto Toivanen
Keyword(s):  
Adverse Selection ◽  
Credit Market

Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi

2012 ◽  
Vol 102 (6) ◽  
pp. 2923-2954 ◽  
Author(s):  
Xavier Giné ◽  
Jessica Goldberg ◽  
Dean Yang
Keyword(s):  
Simple Model ◽  
Field Experiment ◽  
Adverse Selection ◽  
Default Risk ◽  
Credit Market ◽  
Personal Identification ◽  
Randomized Field Experiment ◽  
Ex Ante ◽  
Loan Terms ◽  
Market Consequences

We implemented a randomized field experiment in Malawi examining borrower responses to being fingerprinted when applying for loans. This intervention improved the lender's ability to implement dynamic repayment incentives, allowing it to withhold future loans from past defaulters while rewarding good borrowers with better loan terms. As predicted by a simple model, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. We provide unique evidence that this improvement in repayment rates is accompanied by behaviors consistent with less adverse selection and lower moral hazard. (JEL D14, D82, G21, O12, O16)

A Game-Theoretic Foundation for Competitive Equilibria in the Stiglitz–Weiss Model

2012 ◽  
Vol 13 (2) ◽  
pp. 211-227 ◽  
Author(s):  
Lutz G. Arnold
Keyword(s):  
Adverse Selection ◽  
Price Competition ◽  
Financial Intermediation ◽  
Credit Market ◽  
Selection Model ◽  
Financial Intermediaries ◽  
Competition Models ◽  
Competitive Equilibria ◽  
Game Theoretic

Abstract Financial intermediaries are, by definition, engaged in two-sided competition. Despite the well-known problems of achieving competitive solutions under twosided price competition, models of financial intermediation are commonly solved for competitive equilibria. This article provides a game-theoretic foundation for competitive equilibria in one of the most important models of financial intermediation, the seminal Stiglitz-Weiss (1981) adverse selection model of the credit market with a continuum of borrower types.

scholarly journals Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India

2012 ◽  
Vol 102 (2) ◽  
pp. 1118-1139 ◽  
Author(s):  
Michal Bauer ◽  
Julie Chytilová ◽  
Jonathan Morduch
Keyword(s):  
Risk Aversion ◽  
Moral Hazard ◽  
Adverse Selection ◽  
South India ◽  
Credit Market ◽  
Market Imperfections ◽  
Rural India ◽  
Credit Market Imperfections ◽  
Time Discounting ◽  
Behavioral Features

We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit, a financial tool designed to reduce poverty and fix credit market imperfections. The evidence suggests that microcredit contracts may do more than reduce moral hazard and adverse selection by imposing new forms of discipline on borrowers. We find that, conditional on borrowing from any source, women with present-biased preferences are more likely than others to borrow through microcredit institutions. Another particular contribution of microcredit may thus be to provide helpful structure for borrowers seeking self-discipline. JEL: G21, I38, O15, O16, O18

Adverse Selection in the Home Equity Line of Credit Market

2018 ◽  
Vol 40 (3) ◽  
pp. 453-474
Author(s):  
Michael LaCour-Little ◽  
Yanan Zhang
Keyword(s):  
Adverse Selection ◽  
Credit Market ◽  
Home Equity

The Systemic Effects of Prudential Regulation Toughening:The Results of a Stress-test for Russian Banks

2012 ◽  
pp. 4-31 ◽  
Author(s):  
M. Mamonov ◽  
A. Pestova ◽  
O. Solntsev
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Stress Test ◽  
Credit Market ◽  
Capital Adequacy ◽  
Government Support ◽  
Government Ownership ◽  
Prudential Regulation ◽  
The Government ◽  
The Stability

The stability of Russian banking sector is threatened by three negative tendencies - overheating of the credit market, significant decrease of banks capital adequacy ratios, and growing problems associated with banks lending to affiliated non-financial corporations. The co-existence of these processes reflects the crisis of the model of private investments in Russian banking sector, which was observed during the last 20 years. This paper analyzes the measures of the Bank of Russia undertaken to maintain the stability of the banking sector using the methodology of credit risk stress-testing. Based on this methodology we conclude that the Bank of Russias actions can prevent the overheating of the credit market, but they can also lead to undesirable effects: further expansion of the government ownership in Russian banking sector and substitution of domestic credit supply by cross-border corporate borrowings. The later weakens the competitive positions of Russian banks. We propose a set of measures to harmonize the prudential regulation of banks. Our suggestions rely on design and further implementation of the programs aimed at developing new markets for financial services provided by Russian banks to their corporate and retail customers. The estimated effects of proposed policy measures are both the increase in profitability and capitalization of Russian banks and the decrease of banks demand for government support.

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