Financial Intermediation with Proprietary Information

Sudipto Bhattacharya

CEPR Financial Market Papers from Centre for Economic Policy Research

Abstract: I contrast equilibria in loan markets under bilateral bank- borrower relationships, in which proprietary technological knowledge of borrowers is not revealed to product-market competitors, with equilibria under multilateral financing which may lead to such knowledge being shared across product-market competitors. I examine the conditions for equilibrium existence, ex ante efficiency, and incentives to undertake privately-financed, costly knowledge-generating R&D, under these two differing institutional mechanisms for financing R&D-intensive investments by firms competing in product markets.

Keywords: Intermediation; Proprietary Knowledge; Disclosure (search for similar items in EconPapers)
Date: 1992-10
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Working Paper: Financial Intermediation with Proprietary Information (1993)
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