This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
The role of comparing in financial markets with hidden information Author info | Abstract | Publisher info | Download info | Related research | Statistics Niinimäki, Juha-Pekka () (Department of Economics, Helsinki School of Economics)
Takalo, Tuomas () (Bank of Finland Research)
Kultti, Klaus (Department of Economics, University of Helsinki)
Additional information is available for the following
registered author(s):
This paper studies how comparing can be used to provide information in financial markets in the presence of a hidden characteristics problem. Although an investor cannot precisely estimate the future returns of an entrepreneur’s projects, the investor can mitigate the asymmetric information problem by ranking different entrepreneurs and financing only the very best ones. Information asymmetry can be eliminated with certainty if the number of compared projects is sufficiently large. Because comparing favours centralised information gathering, it creates a novel rationale for the establishment of a financial intermediary.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Paper provided by Bank of Finland in its series Research Discussion Papers with number
1/2006.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length: 41 pages
Date of creation: 01 Jan 2006Date of revision:
Handle: RePEc:hhs:bofrdp:2006_001Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland Web page: http://www.bof.fi/en/tutkimus More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Minna Nyman).
Keywords: asymmetric information ; banking ; corporate finance ; financial intermediation ; ranking ; venture capital ; Other versions of this item:
Find related papers by JEL classification: G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Cerasi, Vittoria & Daltung, Sonja, 2000.
"The optimal size of a bank: Costs and benefits of diversification ,"
European Economic Review ,
Elsevier, vol. 44(9), pages 1701-1726, October.
[Downloadable!] (restricted)
Other versions: Pagano, Marco & Jappelli, Tullio, 1993.
" Information Sharing in Credit Markets ,"
Journal of Finance ,
American Finance Association, vol. 48(5), pages 1693-1718, December.
[Downloadable!] (restricted)
Other versions: Diamond, Douglas W, 1984.
"Financial Intermediation and Delegated Monitoring ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 51(3), pages 393-414, July.
[Downloadable!] (restricted)
Bergemann, Dirk & Hege, Ulrich, 1997.
"Venture Capital Financing, Moral Hazard and Learning ,"
CEPR Discussion Papers
1738, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Bergemann, D. & Hege, U., 1997.
"Venture capital financing, moral hazard, and learning ,"
Discussion Paper
108, Tilburg University, Center for Economic Research.
[Downloadable!] Bergemann, Dirk & Hege, Ulrich, 1998.
"Venture capital financing, moral hazard, and learning ,"
Journal of Banking & Finance ,
Elsevier, vol. 22(6-8), pages 703-735, August.
[Downloadable!] (restricted) HEGE, Ulrich & BERGEMANN, Dirk, 2002.
"The value of benchmarking ,"
Les Cahiers de Recherche
752, HEC Paris.
[Downloadable!]
Other versions: Ramakrishnan, Ram T S & Thakor, Anjan V, 1984.
"Information Reliability and a Theory of Financial Intermediation ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 51(3), pages 415-32, July.
[Downloadable!] (restricted)
Hellwig, Martin F, 2000.
"Financial Intermediation with Risk Aversion ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 67(4), pages 719-42, October.
Other versions: Holmström, Bengt & Tirole, Jean, 1994.
"Financial Intermediation, Loanable Funds and the Real Sector ,"
IDEI Working Papers
40, Institut d'Économie Industrielle (IDEI), Toulouse.
Other versions:
Bengt Holmstrom & Jean Tirole, 1994.
"Financial Intermediation, Loanable Funds and the Real Sector ,"
Working papers
95-1, Massachusetts Institute of Technology (MIT), Department of Economics.
Holmstrom, Bengt & Tirole, Jean, 1997.
"Financial Intermediation, Loanable Funds, and the Real Sector ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 112(3), pages 663-91, August.
Broecker, Thorsten, 1990.
"Credit-Worthiness Tests and Interbank Competition ,"
Econometrica ,
Econometric Society, vol. 58(2), pages 429-52, March.
[Downloadable!] (restricted)
Stiglitz, Joseph E & Weiss, Andrew, 1981.
"Credit Rationing in Markets with Imperfect Information ,"
American Economic Review ,
American Economic Association, vol. 71(3), pages 393-410, June.
[Downloadable!] (restricted)
Gorton, Gary & Winton, Andrew, 2003.
"Financial intermediation ,"
Handbook of the Economics of Finance ,
in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 8, pages 431-552
Elsevier.
[Downloadable!] (restricted)
Bester, Helmut, 1985.
"Screening vs. Rationing in Credit Markets with Imperfect Information ,"
American Economic Review ,
American Economic Association, vol. 75(4), pages 850-55, September.
[Downloadable!] (restricted)
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Jokipii, Terhi, 2006.
"Forecasting market crashes: further international evidence ,"
Research Discussion Papers
22/2006, Bank of Finland.
[Downloadable!]
Kilponen , Juha & Kinnunen , Helvi & Ripatti , Antti, 2006.
"Population ageing in a small open economy – some policy experiments with a tractable general equilibrium model ,"
Research Discussion Papers
28/2006, Bank of Finland.
[Downloadable!]
Bask , Mikael & Liu , Tung & Widerberg , Anna, 2006.
"The stability of electricity prices: estimation and inference of the Lyapunov exponents ,"
Research Discussion Papers
9/2006, Bank of Finland.
[Downloadable!]
Other versions: Toporowski , Jan, 2006.
"Open market operations: beyond the new consensus ,"
Research Discussion Papers
14/2006, Bank of Finland.
[Downloadable!]
Anandarajan , Asokan & Hasan , Iftekhar & McCarthy , Cornelia, 2006.
"The use of loan loss provisions for capital management, earnings management and signalling by Australian banks ,"
Research Discussion Papers
23/2006, Bank of Finland.
[Downloadable!]
Marsh , Ian W, 2006.
"The effect of lenders’ credit risk transfer activities on borrowing firms’ equity returns ,"
Research Discussion Papers
31/2006, Bank of Finland.
[Downloadable!]
Jokivuolle , Esa & Peura , Samu, 2006.
"Rating targeting and the confidence levels implicit in bank capital ,"
Research Discussion Papers
27/2006, Bank of Finland.
[Downloadable!]
Jokipii , Terhi & Lucey, Brian, 2006.
"Contagion and interdependence: measuring CEE banking sector co-movements ,"
Research Discussion Papers
15/2006, Bank of Finland.
[Downloadable!]
Other versions: Siklos, Pierre & Bohl , Martin, 2006.
"Policy words and policy deeds: the ECB and the euro ,"
Research Discussion Papers
2/2006, Bank of Finland.
[Downloadable!]
Other versions:
Pierre L. Siklos & Martin T. Bohl, 2007.
"Policy Words and Policy Deeds: The ECB and the Euro ,"
Working Paper Series
35-07, Rimini Centre for Economic Analysis, revised Jul 2007.
[Downloadable!] P. Siklos, M. Bohl, 2006.
"Policy Words and Policy Deeds: The ECB and the Euro ,"
Working Papers
eg0050, Wilfrid Laurier University, Department of Economics, revised 2006.
[Downloadable!] Pierre L. Siklos & Martin T. Bohl, 2008.
"Policy words and policy deeds: the ECB and the euro ,"
International Journal of Finance & Economics ,
John Wiley & Sons, Ltd., vol. 13(3), pages 247-265.
[Downloadable!] Francis , Bill B & Hasan , Iftekhar & Sun , Xian, 2006.
"Financial market integration and the value of global diversification: evidence from US acquirers in cross-border mergers and acquisitions ,"
Research Discussion Papers
24/2006, Bank of Finland.
[Downloadable!]
Other versions: Aalto-Setälä , Ville & Schindler, Robert, 2006.
"The importance of attractive prices in pricing dynamics ,"
Research Discussion Papers
30/2006, Bank of Finland.
[Downloadable!]
Välimäki , Tuomas, 2006.
"Why the marginal MRO rate exceeds the ECB policy rate? ,"
Research Discussion Papers
20/2006, Bank of Finland.
[Downloadable!]
Access and
download statistics Did you know? Authors can create their own profile with links to their works on the RePEc Author Service .
This page was last updated on 2009-12-3.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .