A model of collateral, investment, and adverse selection

• 成果类型: Article
• 署名作者: Martin, Alberto
• 署名单位: Centre de Recerca en Economia Internacional (CREI); Pompeu Fabra University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2009.01.004
• 发表日期: 2009
• 页码: 1572-1588
• 关键词: Adverse selection; collateral; INVESTMENT; Lending standards; screening

摘要

This paper characterizes the relationship between entrepreneurial wealth and aggregate investment under adverse selection. Its main finding is that such a relationship need not be monotonic. In particular, three results emerge from the analysis: (i) pooling equilibria, in which investment is independent of entrepreneurial wealth, are more likely to arise when entrepreneurial wealth is relatively low; (ii) separating equilibria, in which investment is increasing in entrepreneurial wealth, are most likely to arise when entrepreneurial wealth is relatively high and; (iii) for a given interest rate, an increase in entrepreneurial wealth may generate a discontinuous fall in investment. (C) 2009 Elsevier Inc. All rights reserved.