scholarly journals The Role of Counterparty Risk and Asymmetric Information in the Interbank Market

2017 ◽  
Author(s):  
Giuseppe Cappelletti ◽  
Giovanni Guazzarotti
Keyword(s):  
Asymmetric Information ◽  
Counterparty Risk ◽  
Interbank Market

scholarly journals Liquidity Hoarding and Interbank Market Spreads: The Role of Counterparty Risk

2009 ◽  
Author(s):  
Florian Heider ◽  
Marie Hoerova ◽  
Cornelia Holthausen
Keyword(s):  
Counterparty Risk ◽  
Interbank Market

Liquidity hoarding and interbank market rates: The role of counterparty risk

2015 ◽  
Vol 118 (2) ◽  
pp. 336-354 ◽  
Author(s):  
Florian Heider ◽  
Marie Hoerova ◽  
Cornelia Holthausen
Keyword(s):  
Counterparty Risk ◽  
Interbank Market

scholarly journals Time versus State in Insurance: Experimental Evidence from Contract Farming in Kenya

2018 ◽  
Vol 108 (12) ◽  
pp. 3778-3813 ◽  
Author(s):  
Lorenzo Casaburi ◽  
Jack Willis
Keyword(s):  
Crop Insurance ◽  
Counterparty Risk ◽  
Harvest Time ◽  
Contract Farming ◽  
Present Bias ◽  
The Poor ◽  
Percentage Points ◽  
Randomized Control ◽  
The Difference

The gains from insurance arise from the transfer of income across states. Yet, by requiring that the premium be paid up front, standard insurance products also transfer income across time. We show that this intertemporal transfer can help explain low insurance demand, especially among the poor, and in a randomized control trial in Kenya we test a crop insurance product which removes it. The product is interlinked with a contract farming scheme: as with other inputs, the buyer of the crop offers the insurance and deducts the premium from farmer revenues at harvest time. The take-up rate for pay-at-harvest insurance is 72 percent, compared to 5 percent for the standard pay-up-front contract, and the difference is largest among poorer farmers. Additional experiments and outcomes provide evidence on the role of liquidity constraints, present bias, and counterparty risk, and find that enabling farmers to commit to pay the premium just 1 month later increases demand by 21 percentage points. (JEL G22, I32, O13, O16, Q12, Q14)

scholarly journals Welfare Consequences of Information Aggregation and Optimal Market Size

2017 ◽  
Vol 9 (4) ◽  
pp. 303-323 ◽  
Author(s):  
Kei Kawakami
Keyword(s):  
Asymmetric Information ◽  
Risk Aversion ◽  
Risk Sharing ◽  
Information Aggregation ◽  
Market Size ◽  
Positive Externality ◽  
Trading Model ◽  
Welfare Implications ◽  
The Right

We analyze the welfare implications of information aggregation in a trading model where traders have both idiosyncratic endowment risk and asymmetric information about security payoffs. The optimal market size balances two forces: (i) the risk-sharing role of markets, which creates a positive externality amongst traders, against (ii) the information-aggregation role of prices, which leads to prices that are more correlated with security payoffs, thereby undermining the hedging function of markets. Our analysis indicates that a market with infinitely many traders may not be the right welfare benchmark in the presence of risk aversion and information aggregation. (JEL D43, D62, D82, D83)

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