Innovation in Banking and Excessive Loan Growth
International Monetary Fund
Authors registered in the RePEc Author Service: Alexander F. Tieman
No 08/188, IMF Working Papers from International Monetary Fund
The volume of credit extended by a bank can be an informative signal of its abilities in loan selection and management. It is shown that, under asymmetric information, banks may therefore rationally lend more than they would otherwise in order to demonstrate their quality, thus negatively affecting financial system soundness. Small shifts in technology and uncertainty associated with new technology may lead to large jumps in equilibrium outcomes. Prudential measures and supervision are therefore warranted.
Keywords: Bank credit; Credit demand; Economic models; Risk management; Loans; Household credit; credit screening, loan quality, signaling games, incentive compatibility, probability, banking, equation, banking system, banks ? loan, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cta and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:08/188
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Jim Beardow ().