Arbeitspapier
The Effect of Bank Competition on the Bank's Incentive to Collateralize
It has been argued that competing banks make inefficiently frequent use of collateralization in situations where they are better able to evaluate a project's risk than entrepreneurs. We study the bank's choice between screening and collateralization in a model where banks do not have this superior screening skill. In particular, we study the effect of bank competition on this choice. We find that competing banks use collateral less often than a monopolistic bank because competition will intensify if both banks collateralize. Moreover, bank competition is welfare improving if collateralization is rather costly.
- Sprache
-
Englisch
- Erschienen in
-
Series: Munich Discussion Paper ; No. 2007-24
- Klassifikation
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Law and Economics: General
- Thema
-
Collateralization
screening
incentives
bank competition
Bank
Wettbewerb
Kreditgeschäft
Kreditsicherung
Projektbewertung
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Hainz, Christa
- Ereignis
-
Veröffentlichung
- (wer)
-
Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
- (wo)
-
München
- (wann)
-
2007
- DOI
-
doi:10.5282/ubm/epub.2007
- Handle
- URN
-
urn:nbn:de:bvb:19-epub-2007-0
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Hainz, Christa
- Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
Entstanden
- 2007
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