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Memory in Contracts: The Experience of the EBRD (1991-2003)


  • Lionel Artige

    () (HEC-Department of Economics, Université de Liège.)

  • Rosella Nicolini

    () (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)


The 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.

Suggested Citation

  • Lionel Artige & Rosella Nicolini, 2010. "Memory in Contracts: The Experience of the EBRD (1991-2003)," Working Papers wpdea1002, Department of Applied Economics at Universitat Autonoma of Barcelona.
  • Handle: RePEc:uab:wprdea:wpdea1002

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    References listed on IDEAS

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    More about this item


    Financial contract; Empirical contract theory; Reputation; Asymmetric;

    JEL classification:

    • 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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