New Economics Papers
on Banking
Issue of 2007‒02‒03
four papers chosen by
Roberto J. Santillán–Salgado, EGADE-ITESM

  1. Institutions and Bank Behavior By Paul Wachtel; Rainer Haselmann
  2. Imperfect Competition and Costly Screening in the Credit Market under Conditions of Asymmetric Information By Kubo, Koji
  3. Reputational Risk and Conflicts of Interest in Banking and Finance: The Evidence So Far By Ingo Walter
  4. Credit Elasticities in Less-Developed Economies: Implications for Microfinance By Karlan, Dean S.; Zinman, Jonathan

  1. By: Paul Wachtel; Rainer Haselmann
    Date: 2006
  2. By: Kubo, Koji
    Abstract: This article provides an analysis of how banks determine levels of information production when they are in imperfect competition and there is a condition of information asymmetry between borrowers and banks. Specifically, the study concentrates on information production activities of banks in duopoly where they simultaneously determine intensity of pre-loan screening as well as interest rates. The preliminary model of this paper illustrates that due to strategic complementarities between banks, banking competition can result in inferior equilibrium out of multiple equilibria and insufficient information production. Policymakers must take into account the possible adverse effects of competition-enhancing policies on information production activities.
    Keywords: Banking, Imperfect competition, Information production, Banks, Credit, G World,others
    JEL: D82 G21
    Date: 2006–10
  3. By: Ingo Walter
    Date: 2006
  4. By: Karlan, Dean S.; Zinman, Jonathan
    Abstract: Policymakers often prescribe that microfinance institutions increase interest rates to eliminate reliance on subsidies. This strategy makes sense if the poor are rate insensitive: then microlenders increase profitability (or achieve sustainability) without reducing the poor’s access to credit. We test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in South Africa. The demand curves are downward-sloping, and steep for price increases relative to the lender’s standard rates. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates, which is consistent with binding liquidity constraints.
    Keywords: microfinance
    JEL: G2
    Date: 2007–01

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