'Irresponsible Lending' with a Better Informed Lender  

Oleh:

Inderst, Roman

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 118 no. 532 (Oct. 2008), page 1499.
Topik: Irresponsible Lending; Better Informed Lender; Consumer; Surplus
Fulltext: 1499.pdf (547.06KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.29 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We present a simple model of personal finance in which an incumbent lender has an information advantage vis-à-vis both potential competitors and households. In order to extract more consumer surplus, a lender with sufficient market power may engage in 'irresponsible' lending, approving credit even if this is knowingly against a household's best interest. Unless rival lenders are equally well informed, competition may reduce welfare. This holds, in particular, if less informed rivals can free ride on the incumbent's superior screening ability.

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