Nabi, Mahmoud Sami and Ben Souissi, Souraya (2011): Could dishonest banks be disciplined ?
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Could a credit bureau incite banks to report correct information about their borrowers? We show that banks will choose the incorrect information sharing in the last period to increase their profits. Interestingly, however, it is shown that this strategy is optimal at the second period only if the proportion of successful projects is superior to 50%. In that case the Credit Bureau should enforce a sufficiently high penalty in order to incite banks to share information honestly. The penalty threshold that conditions the efficiency of the credit bureau’s role is endogenously derived.
|Item Type:||MPRA Paper|
|Original Title:||Could dishonest banks be disciplined ?|
|English Title:||Could dishonest banks be disciplined ?|
|Keywords:||Information sharing, penalty, incitation mechanism, credit bureau.|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Mahmoud Sami NABI|
|Date Deposited:||04. Jul 2011 19:12|
|Last Modified:||21. Feb 2013 15:34|
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