The desire for land: Strategic lending with adverse selection

• 成果类型: Article
• 署名作者: Bell, C; Clemenz, G
• 署名单位: Ruprecht Karls University Heidelberg; University of Vienna
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2005.06.003
• 发表日期: 2006
• 页码: 1-25
• 关键词: rural credit markets; heterogeneous valuations of collateral; adverse selection

摘要

This paper deals with a setting in which borrowers and lenders place different values on an asset that can be used as collateral. Under adverse selection, lenders may rationally choose credit contracts with the object of attracting a relatively risky group of clients, so raising their chances of gaining possession of the asset through default. Contracts of differing attractiveness to borrowers can also coexist in equilibrium. When an 'inside' and an 'outside' lender compete, the latter placing a lower value on the collateral, and their loanable funds are sufficiently limited, a separating equilibrium may exist in which the insider offers a contract which attracts risky borrowers, whereas the outsider's contract is aimed at a safer group. If loanable funds are ample, the only equilibrium will involve pooling contracts, but the insider may still offer more attractive contracts in an entry game. (c) 2005 Elsevier B.V. All rights reserved.