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Tech-Driven Intermediation in the Originate-to-Distribute Model

Author

Listed:
  • He, Zhiguo

    (Stanford U)

  • Jiang, Sheila

    (U of Florida)

  • Xu, Douglas

    (U of Florida)

Abstract

This paper develops a general equilibrium model to examine the role of information technology when intermediaries facilitate the origination and distribution of assets given information asymmetry. Information technology measures the informativeness of asset-quality signals received by intermediaries, who purchase assets produced by originators and then resell them to uninformed investors. Allowing intermediaries to operate has a mixed social welfare effect: Uninformed intermediation can be welfare reducing when adverse selection is severe in the economy, while informed intermediation always improves social welfare.

Suggested Citation

  • He, Zhiguo & Jiang, Sheila & Xu, Douglas, 2024. "Tech-Driven Intermediation in the Originate-to-Distribute Model," Research Papers 4145, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:4145
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    File URL: https://www.gsb.stanford.edu/faculty-research/working-papers/tech-driven-intermediation-originate-distribute-model
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    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • 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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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