Financial Intermediation, Moral Hazard, And Pareto Inferior Trade


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Financial Intermediation, Moral Hazard, And Pareto Inferior Trade

Vis færre oplysninger Olai Hansen, Bodil en_US Keiding, Hans en_US 2009-02-04T10:27:34Z 2009-02-04T10:27:34Z 2004-10-08T00:00:00Z en_US
dc.description.abstract We consider a simple model of international trade under uncertainty, where production takes time and is subject to uncertainty. The riskiness of production depends on the choices of the producers, not observable to the general public, and these choices are influenced by the availability and cost of credit. If investment is financed by a bond market, then a situation may arise where otherwise identical countries end up with different levels of interest and different choices of technique, which again implies differences in achieved level of welfare. Under suitable conditions on the parameters of the model, the market may not be able to supply credits to one of the countries. The introduction of financial intermediaries with the ability to control the debtors may change this situation in a direction which is welfare improving (in a suitable sense) by increasing expected output in the country with high interest rates, while opening up for new problems of asymmetric information with respect to the monitoring activity of the banks. Keywords: Capital outflow, financial intermediaries, moral hazard JEL classification: F36, D92, E44 en_US
dc.format.extent 17 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2004-007 en_US
dc.subject.other kep en_US
dc.title Financial Intermediation, Moral Hazard, And Pareto Inferior Trade en_US
dc.type wp en_US
dc.accessionstatus modt04okt07 miel en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Økonomisk Institut en_US
dc.contributor.departmentshort ECON en_US
dc.contributor.departmentuk Department of Economics en_US
dc.contributor.departmentukshort ECON en_US
dc.idnumber x656444257 en_US København en_US
dc.publisher.year 2004 en_US

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