Information production, banking competition and the market structure of the banking industry

Arbeitspapier

This paper analyzes the effects of pre-lending screening on loan market outcome under oligopolistic competition. Better screening decreases loan interest margins and, provided that the average creditworthiness of borrowers is not too low, increases lending volume. We contrast specifically independent screening to common (correlated) filters, and find that the margins are wider and lending volume higher under independent screening. The determinants of the size of the banking industry are also considered. With common filters, more accurate screening increases banks’ incentives to enter under common filters, while with independent screening these incentives may be undermined. – screening ; common (correlated) filters ; banking competition ; loan pricing ; horizontal differentiation ; entry

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ETLA Discussion Papers ; No. 749

Classification and Topics

• Classification: Wirtschaft
• Subject: Kreditgeschäft ; Kreditrisiko ; Signalling ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hyytinen, Ari
• Event: Veröffentlichung
• (who): The Research Institute of the Finnish Economy (ETLA)
• (where): Helsinki
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/63676
• Last update: 10.03.2025, 11:42 AM CET