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Signaling in Online Credit Markets / Kei Kawai, Ken Onishi, Kosuke Uetake.
- Format:
- Book
- Author/Creator:
- Kawai, Kei.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29268.
- NBER working paper series no. w29268
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2021.
- Summary:
- We study how signaling affects equilibrium outcomes and welfare in an online credit market using detailed data on loan characteristics and borrower repayment. We build and estimate an equilibrium model in which a borrower may signal her default risk through the reserve interest rate. Comparing a market with and without signaling relative to the benchmark with no asymmetric information, we find that adverse selection destroys as much as 34% of total surplus, up to 78% of which can be restored with signaling. We also estimate backward-bending supply curves for some markets, consistent with the prediction of Stiglitz & Weiss (1981).
- Notes:
- Print version record
- September 2021.
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