Benchmarking and Comparing Entrepreneurs with Incomplete Information
This paper studies how the creation of (ex ante) benchmarks and rankings can be used to provide information in financial markets. Although an investor cannot precisely estimate the future returns of an entrepreneur’s projects, the investor can mitigate the incomplete information problem by comparing different entrepreneurs and financing only the very best ones. Incomplete information can be eliminated with certainty if the number of compared projects is sufficiently large. Because the possibility to make benchmarks and comparisons favours centralised information gathering, it creates a novel rationale for the establishment of a financial intermediary.
Volume (Year): 20 (2007)
Issue (Month): 2 (Autumn)
|Contact details of provider:|| Web page: http://www.taloustieteellinenyhdistys.fi|
More information through EDIRC
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.:
- Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 7-25, January.
- Gorton, Gary & Winton, Andrew, 2003.
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
- Gary Gorton & Andrew Winton, 2002. "Financial Intermediation," Center for Financial Institutions Working Papers 02-28, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Gary Gorton & Andrew Winton, 2002. "Financial Intermediation," NBER Working Papers 8928, National Bureau of Economic Research, Inc.
- 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.
- Bergemann, Dirk & Hege, Ulrich, 1997. "Venture Capital Financing, Moral Hazard and Learning," CEPR Discussion Papers 1738, C.E.P.R. Discussion Papers.
- Ulrich Hege & Dirk Bergemann, 1998. "Venture capital financing, moral hazard, and learning," Post-Print hal-00481696, HAL.
- Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
- Broecker, Thorsten, 1990. "Credit-Worthiness Tests and Interbank Competition," Econometrica, Econometric Society, vol. 58(2), pages 429-52, March.
- Ulrich Hege & D. Bergemann, 2004.
"The Value of Benchmarking,"
- Berger, Allen N & Frame, W Scott & Miller, Nathan H, 2005.
"Credit Scoring and the Availability, Price, and Risk of Small Business Credit,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 37(2), pages 191-222, April.
- Allen N. Berger & W. Scott Frame & Nathan H. Miller, 2002. "Credit scoring and the availability, price, and risk of small business credit," FRB Atlanta Working Paper 2002-6, Federal Reserve Bank of Atlanta.
- Allen N. Berger & W. Scott Frame & Nathan H. Miller, 2002. "Credit scoring and the availability, price, and risk of small business credit," Finance and Economics Discussion Series 2002-26, Board of Governors of the Federal Reserve System (U.S.).
- Hellwig, Martin, 1998.
"Financial intermediation with risk aversion,"
98-39, Sonderforschungsbreich 504.
- 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.
- V. Cerasi & S. Daltung, 1995. "The Optimal Size of a Bank: Costs and Benefits of Diversification," Departmental Working Papers 1995-05, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Blochlinger, Andreas & Leippold, Markus, 2006. "Economic benefit of powerful credit scoring," Journal of Banking & Finance, Elsevier, vol. 30(3), pages 851-873, March.
- Krasa, Stefan & Villamil, Anne P., 1992. "Monitoring the monitor: An incentive structure for a financial intermediary," Journal of Economic Theory, Elsevier, vol. 57(1), pages 197-221.
- 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.
- Niinimaki, J. -P., 2001. "Intertemporal diversification in financial intermediation," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 965-991, May.
When requesting a correction, please mention this item's handle: RePEc:fep:journl:v:20:y:2007:i:2:p:91-107. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Editorial Secretary)
If references are entirely missing, you can add them using this form.