Costly monitoring, financial intermediation, and equilibrium credit rationing
Read Online
Share

Costly monitoring, financial intermediation, and equilibrium credit rationing

  • 491 Want to read
  • ·
  • 28 Currently reading

Published by Institute for Economic Research, Queen"s University in Kingston, Ont., Canada .
Written in English

Subjects:

  • Credit control -- Mathematical models.,
  • Monetary policy -- Mathematical models.,
  • Financial institutions -- Mathematical models.,
  • Intermediation (Finance) -- Mathematical models.

Book details:

Edition Notes

Includes bibliographical references.

StatementStephen D. Williamson.
SeriesDiscussion paper,, #583, Discussion paper (Queen"s University (Kingston, Ont.). Institute for Economic Research) ;, no. 583.
Classifications
LC ClassificationsHG3705 .W55 1984
The Physical Object
Pagination31 p. ;
Number of Pages31
ID Numbers
Open LibraryOL2602098M
LC Control Number85159943

Download Costly monitoring, financial intermediation, and equilibrium credit rationing

PDF EPUB FB2 MOBI RTF

This paper establishes a link between equilibrium credit rationing and financial intermediation, in a model with asymmetrically informed lenders and borrowers, costly monitoring, and investment project indivisibilities. This paper establishes a link between equilibrium credit rationing and financial intermediation, in a model with asymmetrically informed lenders and borrowers, costly monitoring with increasing returns to scale, and investment project indivisibilities. Intermediation dominates borrowing and lending between individuals. Equilibrium interest rates, the aggregate quantity of loans, and the size. Downloadable (with restrictions)! This paper establishes a link between equilibrium credit rationing and financial intermediation, in a model with asymmetrically informed lenders and borrowers, costly monitoring with increasing returns to scale, and investment project indivisibilities. Intermediation dominates borrowing and lending between individuals. Abstract This paper develops a model with asymmetrically informed agents and costly monitoring of loan contracts, where an equilibrium can exhibit credit rationing. Borrowers are identical ex ante.

Stephen D. Williamson; Costly Monitoring, Loan Contracts, and Equilibrium Credit Rationing*, The Quarterly Journal of Economics, Volume , Issue 1, 1 Februar We use cookies to enhance your experience on our continuing to use our website, you are agreeing to our use of cookies. costly monitoring, equilibrium credit rationing of the type dis- cussed by Stiglitz and Weiss [] and Keeton [] can exist. In equilibrium it may be the case that, among a group of identical would-be borrowers, some receive loans, while others do not. Our model relies on monitoring . borrowers. A simple general equilibrium model is developed in which credit is rationed in one of the two production sectors due to costly information in financial markets. Opening to international capital markets is shown to cause an outflow of domestic wealth but no inflow of foreign credit, leading to more severe credit rationing. This paper establishes a link between equilibrium credit rationing and financial intermediation, in a model with asymmetrically informed lenders and borrowers, costly monitoring with increasing.

There are five major topics: stylized facts about financial intermediary organizations and markets; the history of thought about financial intermediation; the theory of financial intermediaries, with an aside on equilibrium credit rationing; the regulation of financial intermediation; and trends in recent research and open research questions. Diamond, D. \Financial Intermediation and Delegated Monitoring," Review of Economic Studies, 51 (), Williamson, S. \Costly Monitoring, Financial Intermediation, and Equilibrium Credit Rationing," Journal of Monetary Economics, 18 (). Financial Intermediaries as Liquidity Providers. Williamson () develops a model with asymmetrically informed agents and costly monitoring of loan contracts. Instead of credit rationing, debt contract in equilibrium is an optimal solution to the adverse selection or moral hazard. implications of costly monitoring and examine various policy interventions.4 Our main result is that monitoring costs operate within the model like an externality such that the market equilibrium, with or without rationing, may be inefficient. There may, therefore, be a .