A Smoke Screen Theory of Financial Intermediation - Archive ouverte HAL
Preprints, Working Papers, ... Year : 2006

A Smoke Screen Theory of Financial Intermediation

Régis Breton
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Abstract

This paper analyzes a stylized (two period) credit market where investors care about the appropriability of the information they produce when they engage in costly ex ante evaluation of borrowers quality. We show that diversified intermediation arises as a dissimulation mechanism allowing investors to extract informational rents in the second period, thereby mitigating the underlying appropriability problem.
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Dates and versions

halshs-00009595 , version 1 (13-03-2006)

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  • HAL Id : halshs-00009595 , version 1

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Régis Breton. A Smoke Screen Theory of Financial Intermediation. 2006. ⟨halshs-00009595⟩
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