Money, Credit, and Financial Intermediation with Private Information and Costly Monitoring

2021 ◽  
Author(s):  
Duhyeong Kim
Keyword(s):  
Private Information ◽  
Financial Intermediation ◽  
Costly Monitoring

scholarly journals MONEY, MARKETS, AND DYNAMIC CREDIT

2010 ◽  
Vol 15 (S1) ◽  
pp. 42-61 ◽  
Author(s):  
Hongfei Sun
Keyword(s):  
Private Information ◽  
Financial Intermediation ◽  
Money Markets ◽  
Settlement Period ◽  
Integrated Theory ◽  
History Of ◽  
Incentive Problems ◽  
Efficient Allocations

This paper presents an integrated theory of money and dynamic credit. I study financial intermediation when both the intermediary and individuals have private information. I show that money is essential to solving two-sided incentive problems under the dynamic credit arrangement. First, requiring settlement with money can induce market trades that generate information-revealing prices to discipline the intermediary. Second, it is optimal for the intermediary to issue money that can record its own history of being used in settlements, and to require that settlements be made with only money that has been returned to the intermediary every settlement period. This arrangement effectively reduces individuals' incentives to deviate and allows intermediation to achieve efficient allocations.

Entry deterrence under financial intermediation with private information and hidden contracts

2005 ◽  
Vol 9 (3) ◽  
pp. 203-225 ◽  
Author(s):  
Neelam Jain ◽  
Thomas D. Jeitschko ◽  
Leonard J. Mirman
Keyword(s):  
Private Information ◽  
Financial Intermediation ◽  
Entry Deterrence
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