Competitive Search Equilibrium in the Credit Market under Asymmetric Information and Limited Commitment

Jae Song

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a model of a competitive search credit market under hidden information and limited commitment. Using the model, it provides a theoretical account that links time delays and costs in financial intermediation as well as lack of collateral to the distribution of credit supply and interest rate spreads. The link sheds light on and explains the possibility of pure credit rationing due to the credit frictions. This paper also demonstrates the possibility of contract dispersion among homogeneous borrowers.

Keywords: credit frictions; competitive search; contract; market tightness (search for similar items in EconPapers)
JEL-codes: D82 E43 E51 G21 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-ban, nep-com, nep-cta, nep-dge and nep-mac
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https://mpra.ub.uni-muenchen.de/75995/1/MPRA_paper_57515.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:57515

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