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Conflicts of Interest and Credible Information Provision by Specialized and One-Stop Banks

Author

Listed:
  • Joel Shapiro
  • Patrick Bolton
  • Xavier Freixas

Abstract

This paper is concerned with the general question of the provision of information by financial intermediaries to their customers. Specifically, it analyzes the different ways the market can be organized and its effects on pricing and the level of information investors obtain. We find that market structure depends on on the reputation costs, switching costs for customers, and the existence of market power. This provides a new justification for the presence of one-stop banks. We demonstrate these findings by embedding signaling within a model of multi-product price competition.

Suggested Citation

  • Joel Shapiro & Patrick Bolton & Xavier Freixas, 2004. "Conflicts of Interest and Credible Information Provision by Specialized and One-Stop Banks," Econometric Society 2004 North American Winter Meetings 132, Econometric Society.
    • Handle: RePEc:ecm:nawm04:132
    as

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    File URL: http://repec.org/esNAWM04/up.31226.1048246716.pdf
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    References listed on IDEAS

    as
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    6. Wolfgang Pesendorfer & Asher Wolinsky, 2003. "Second Opinions and Price Competition: Inefficiency in the Market for Expert Advice," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 417-437.
    7. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
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    9. John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    One-stop Bank; Information Provision; Signaling;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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