Arbeitspapier
The role of comparing in financial markets with hidden information
This paper studies how comparing can be used to provide information in financial markets in the presence of a hidden characteristics problem.Although an investor cannot precisely estimate the future returns of an entrepreneur's projects, the investor can mitigate the asymmetric information problem by ranking different entrepreneurs and financing only the very best ones.Information asymmetry can be eliminated with certainty if the number of compared projects is sufficiently large.Because comparing favours centralised information gathering, it creates a novel rationale for the establishment of a financial intermediary.
- ISBN
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952-462-256-4
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Finland Research Discussion Papers ; No. 1/2006
- Classification
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Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
- Subject
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asymmetric information
banking
corporate finance
financial intermediation
ranking
venture capital
- Event
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Geistige Schöpfung
- (who)
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Niinimäki, Juha-Pekka
Takalo, Tuomas
Kultti, Klaus
- Event
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Veröffentlichung
- (who)
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Bank of Finland
- (where)
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Helsinki
- (when)
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2006
- Handle
- Last update
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10.03.2025, 11:46 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Niinimäki, Juha-Pekka
- Takalo, Tuomas
- Kultti, Klaus
- Bank of Finland
Time of origin
- 2006
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