Title of article
Moralhazardandadverseselectionintheoriginate-to-distribute model ofbankcredit
Author/Authors
Antje Berndt، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
19
From page
725
To page
743
Abstract
Bank credithasevolvedfromthetraditionalrelationshipbankingmodeltoanoriginate-
to-distribute model.Weshowthattheborrowerswhoseloansaresoldinthesecondary
market underperformtheirpeersbyabout9%peryear(risk-adjusted)overthethree-
yearperiodfollowingtheinitialsaleoftheirloans.Therefore,eitherbanksare
originatingandsellingloansoflowerqualityborrowersbasedonunobservableprivate
information(adverseselection),and/orloansalesleadtodiminishedbankmonitoring
that affectsborrowersnegatively(moralhazard).Weproposeregulatoryrestrictionson
loan sales,increaseddisclosure,andaloantradingexchange/clearinghouseas
mechanismstoalleviatetheseproblems.
Keywords
Syndicated loansSecondary loanmarketOriginate-to-distributeMoral hazardAdverseselection
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846327
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