Memory in Contracts: The Experience of the EBRD (1991-2003)
AbstractThe objective of this paper is to identify the role of memory as a screening device in repeated contracts with asymmetric information in financial intermediation. We use an original dataset from the European Bank for Reconstruction and Development. We propose a simple empirical method to capture the role of memory using the client’s reputation. Our results unambiguously isolate the dominant effect of memory on the bank’s lending decisions over market factors in the case of established clients.
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Bibliographic InfoPaper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea1002.
Length: 57 pages
Date of creation: Mar 2010
Date of revision:
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Web page: http://www.uab.cat/departament/economia-aplicada/
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Financial contract; Empirical contract theory; Reputation; Asymmetric;
Other versions of this item:
- Lionel Artige & Rosella Nicolini, 2008. "Memory in Contracts: The experience of the EBRD (1991-2003)," CREPP Working Papers 0803, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
- Lionel Artige & Rosella Nicolini, 2008. "Memory in Contracts: The Experience of the EBRD (1991-2003)," UFAE and IAE Working Papers 724.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
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