Fondazione GRINS
Growing Resilient,
Inclusive and Sustainable
Galleria Ugo Bassi 1, 40121, Bologna, IT
C.F/P.IVA 91451720378
Finanziato dal Piano Nazionale di Ripresa e Resilienza (PNRR), Missione 4 (Infrastruttura e ricerca), Componente 2 (Dalla Ricerca all’Impresa), Investimento 1.3 (Partnership Estese), Tematica 9 (Sostenibilità economica e finanziaria di sistemi e territori).
Open Access
THEMATIC AREAS
RESEARCH LINES
RESOURCES
In a simple lending model with informational asymmetry, we investigate the effect of bank market structure on the amount of collateral provided by firms. We analyze the strategic decision of a potential entrepreneur regarding the amount of wealth to pledge as collateral to secure a loan. The novel result is that the equilibrium collateral can be lower in a monopoly market than under perfect competition. A policy intervention designed to enhance lending is always Pareto-improving in a monopoly but not in a competitive banking industry, even though the associated policy costs are lower in the latter setting.
AKNOWLEDGEMENTS
This study was funded by the European Union - NextGenerationEU, in the framework of the GRINS - Growing Resilient, INclusive and Sustainable project (GRINS PE00000018). The views and opinions expressed are solely those of the authors and do not necessarily reflect those of the European Union, nor can the European Union be held responsible for them.
CITE THIS WORK