EconPapers    
Economics at your fingertips  
 

Asymmetric Information and Imperfect Competition in Lending Markets

Gregory S. Crawford, Nicola Pavanini and Fabiano Schivardi ()

American Economic Review, 2018, vol. 108, issue 7, 1659-1701

Abstract: We study the effects of asymmetric information and imperfect competition in the market for small business lines of credit. We estimate a structural model of credit demand, loan use, pricing, and firm default using matched firm-bank data from Italy. We find evidence of adverse selection in the form of a positive correlation between the unobserved determinants of demand for credit and default. Our counterfactual experiments show that while increases in adverse selection increase prices and defaults on average, reducing credit supply, banks' market power can mitigate these negative effects.

JEL-codes: D22 D82 G21 G32 L13 L25 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20150487
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20150487 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... tA5Ho3C1B6hFJftUP8p7 (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... 7Tik4EUlYFi3BGxhk-hM (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... nSkdestOg0muVUVCzuAt (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Asymmetric Information and Imperfect Competition in Lending Markets (2017) Downloads
Working Paper: Asymmetric Information and Imperfect Competition in Lending Markets (2015) Downloads
Working Paper: Asymmetric Information and Imperfect Competition in Lending Markets (2015) Downloads
Working Paper: Asymmetric information and imperfect competition in lending markets (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:108:y:2018:i:7:p:1659-1701

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

 
Page updated 2019-12-06
Handle: RePEc:aea:aecrev:v:108:y:2018:i:7:p:1659-1701