Equilibrium in Financial Markets with Adverse Selection PDF Download
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Author: Tuomas Takalo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Tuomas Takalo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Author: Tuomas Takalo
Publisher:
ISBN: 9789524620406
Category :
Languages : en
Pages : 45
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Book Description
We study a financial market adverse selection model where all agents are endowed with initial wealth and choose to invest as entrepreneurs or financiers, or not to invest. We show that often a lack of outside finance leads to the emergence of financial markets where availability of outside finance leads to autarky. We find that i) there exist Pareto-efficient and inefficient equilibria; ii) adverse selection has more severe consequences for poorer economies; iii) increasing initial wealth may cause a shift from Pareto-efficient to inefficient equilibrium; iv) increasing the proportion of agents with positive NPV projects causes a shift from inefficient to efficient equilibrium; v) equilibrium financial contracts are either equity-like or 'pure' debt contracts; vi) agents with negative (positive) NPV projects earn rents only in (non- )wealth-constrained economies; vii) agents earn rents only when employing pure debt contracts; and viii) removing storage technology destroys the only Pareto-efficient equilibrium in non-wealth-constrained economies. Our model enables analysis of various policies concerning financial stability, the need for sophisticated financial institutions, development aid, and the promotion of entrepreneurship.
Author: Fabrizio Mattesini
Publisher: Dartmouth Publishing Company
ISBN:
Category : Business & Economics
Languages : en
Pages : 208
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Book Description
The study of the interaction between the financial sector and the sector of the economy is one of the most recent advances in macroeconomic theory. While mainstream economics assigns a passive role to the financial sector there is a growing body of literature which emphasizes the importance of financial intermediaries in explaining fluctuations and the determination of the process through which monetary policy impulses are transmitted to the rest of the economy. This literature has its origin in the models that rely on asymmetric information to explain imperfections in financial markts and in empirical evidence collected through various econometric techniques and through historical studies. This book surveys the relevant work ion the subject, evaluates the empirical evidence and the explanatory power of the theories proposed and furnishes new and empirical results.
Author: Emilio Barucci
Publisher: Springer Science & Business Media
ISBN: 1447100891
Category : Business & Economics
Languages : en
Pages : 473
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Book Description
A presentation of classical asset pricing theory, this textbook is the only one to address the economic foundations of financial markets theory from a mathematically rigorous standpoint and to offer a self-contained critical discussion based on empirical results. Tools for understanding the economic analysis are provided, and mathematical models are presented in discrete time/finite state space for simplicity. Examples and exercises included.
Author: Charl Kengchon
Publisher:
ISBN:
Category :
Languages : en
Pages : 334
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Author: Jon Strand
Publisher:
ISBN: 9788257084325
Category :
Languages : en
Pages : 28
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Author: Gerald D. Jaynes
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
I model financial markets that structure decision-making into discrete points separating contract offers, applications, and acceptance/denial decisions. Endogenous beliefs about applicants' risk types emerge as the institutional process extracts private information allowing uninformed firms to infer risk qualities by comparing applications of many consumers. Endogenous beliefs and low-risk consumer behavior render truthful disclosure of transactions incentive compatible supporting a unique equilibrium robust to cream-skimming and cross-subsidizing deviations, even under Hellwig's “secret” policy assumption. In equilibrium each type demands low-risk's optimal pooling policy and high-risk supplement to full coverage at fair-price. Nonpassive consumers' belief firms are sequentially rational necessary for equilibrium; lemon equilibrium with only high-risk insured possible.
Author: Koralai Kirabaeva
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Colin Rose
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 32
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Author: Jaewoo Ryoo
Publisher:
ISBN:
Category :
Languages : en
Pages : 44
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Book Description
