Financing Competitive Asset Bids When Information is Asymmetric: The Role of Collateral as a Signal
In this paper, borrowing agents require capital to finance competitive bids for a single productive asset rather than requiring capital for individual projects. Loan size is no longer effective as a signaling mechanism. Instead, high quality agents will either offer a sufficiently high level of collateral to signal their type or choose to pool with low quality agents. A pooling equilibrium will emerge if the implicit cost of signaling is too high but then high quality borrowers must bid against all borrowers rather than only their own type.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1998|
|Contact details of provider:|| Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia|
Phone: +61 3 8344 8560
Fax: +61 3 8344 6899
Web page: http://fbe.unimelb.edu.au/economics
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:662. 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: (Muntasha Meemnun Khan)
If references are entirely missing, you can add them using this form.