Open Daily: 10am - 10pm | Alley door pickup 10am - 7pm 3038 Hennepin Ave Minneapolis, MN
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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
Competition in Credit Markets: A Theoretic Analysis

Competition in Credit Markets: A Theoretic Analysis

Tröge, Michael

Paperback

Series: Beiträge Zur Betriebswirtschaftlichen Forschung, Book 94

Investing & FinanceGeneral MathematicsProbability & Statistics

ISBN10: 382449048X
ISBN13: 9783824490486
Publisher: Springer Nature
Published: Sep 27 2001
Pages: 117
Weight: 0.37
Height: 0.28 Width: 5.83 Depth: 8.27
Language: English
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.

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