Title: Imperfect information and credit market equilibrium
Abstract: A model of credit market equilibrium is constructed which emphasises the role of asymmetrics information. It is in the spirit of Jaffee and Russell (1976) but it possesses a more general set of equilibria. By modifying their model in a number of ways, both pooling and separating Noah anticipatory equilibria are shown to be possible outcomes. In the framework of the paper, banks are not passive, they play an active role in developing contracts which sort borrowers into the classes. Competition means that in equilibrium banks offer the same contracts. The relevance of the analysis in the paper to more general models which include consideration of agency problems, moral hazard, screening and sequential loan contracts is commended on but not discussed in any detail.
Publication Year: 1984
Publication Date: 1984-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 2
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