Competition in credit markets : a theoretic analysis /
Competition in credit markets is different from competition in simple product markets. The allocation of capital is not only determined by its price, but banks actively decide to whom they will provide finance. In addition, the provision of credit is not a spot transaction, but extends over a certai...
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| Format: | eBook |
| Language: | English |
| Published: |
Wiesbaden :
Springer Fachmedien,
2001.
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| Edition: | 1. Auflage. |
| Series: | Beiträge zur betriebswirtschaftlichen Forschung ;
Bd. 94. |
| Subjects: | |
| Online Access: | Connect to the full text of this electronic book |
| Summary: | Competition in credit markets is different from competition in simple product markets. The allocation of capital is not only determined by its price, but banks actively decide to whom they will provide finance. In addition, the provision of credit is not a spot transaction, but extends over a certain period of time. Banks need to acquire information in order to efficiently screen borrowers before providing credit and to monitor them during the credit relationship to make sure that the credit will be paid back. Michael Trge develops game-theoretic and auction-theoretic models for the strategic interaction of banks in the credit market. He shows that in narrow oligopolies only one bank will carry out detailed creditworthyness tests for a firm and that in very competitive markets information about a borrowers quality can reduce a banks profit. The author also points out that equity ownership of a bank increases the expected interest rates for a firm and that a banks concern for a good reputation may lead to credit rationing. . |
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| Physical Description: | 1 online resource (xii, 114 pages) : illustrations. |
| ISBN: | 9783663083108 (electronic bk.) 3663083101 (electronic bk.) |