Informational asymmetries and private credit in Lima, Peru, 1825-65

Luis Zegarra

No 18018, Working Papers from Economic History Society

Abstract: "This article examines the credit market of Lima, Peru, in 1825-65 and analyzes the effects of information asymmetries on the allocation of credit. Family loans were associated with lower interest rates due to differences in information costs. However, private lenders did not allocate a large portion of loans to their relatives. As the elite was largely known, lenders partly coped with information asymmetries by lending to the elite. Specialists on lending also rose in response to market imperfections. By economizing on screening and monitoring, specialists partly coped with information asymmetries. The evidence also suggests that notaries served as intermediaries and reduced information costs. Nevertheless, private lenders did not fully cope with information asymmetries: high information costs severely restricted interregional lending."

Keywords: "Information asymmetries; credit; Latin America; Peru" (search for similar items in EconPapers)
JEL-codes: G21 N26 (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-cfn and nep-his
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