Competition in Credit Markets : A theoretic analysis / by Michael Tröge.

Format:

Book

Author/Creator:

Tröge, Michael., Author.

Series:

Beiträge zur betriebswirtschaftlichen Forschung ; 94

Language:

English

Subjects (All):

Finance.

Game theory.

Financial Economics.

Game Theory.

Local Subjects:

Financial Economics.

Game Theory.

Physical Description:

1 online resource (XIII, 117 p. 2 illus.)

Edition:

1st ed. 2001.

Place of Publication:

Wiesbaden : Deutscher Universitätsverlag : Imprint: Deutscher Universitätsverlag, 2001.

Language Note:

English

Summary:

Competition in credit markets is different from competition in simple product markets. The allocation of capital is not only determined by its price, but banks actively decide to whom they will provide finance. In addition, the provision of credit is not a spot transaction, but extends over a certain period of time. Banks need to acquire information in order to efficiently screen borrowers before providing credit and to monitor them during the credit relationship to make sure that the credit will be paid back. Michael Tröge develops game-theoretic and auction-theoretic models for the strategic interaction of banks in the credit market. He shows that in narrow oligopolies only one bank will carry out detailed creditworthyness tests for a firm and that in very competitive markets information about a borrower´s quality can reduce a bank´s profit. The author also points out that equity ownership of a bank increases the expected interest rates for a firm and that a bank´s concern for a good reputation may lead to credit rationing. .

Contents:

1 Introduction

2 Information acquisition in credit auctions

3 Open bid auctions

4 Equity ownership of banks

5 Usury and Credit Rationing

A Proofs for Chapter 2

B Proofs for Chapter 3

C Proofs for Chapter 4

D Proofs for Chapter 5.

Notes:

Bibliographic Level Mode of Issuance: Monograph

Includes bibliographical references at the end of each chapters.

ISBN:

3-663-08310-1