IDEAS home Printed from https://ideas.repec.org/p/exe/wpaper/0018.html
   My bibliography  Save this paper

Borrower and Lender Reputation Effects: A New Theory of Financial Intermediation

Author

Listed:
  • Bijapur, M.

Abstract

This paper formulates a new theory of financial intermediation and explains the general structure of credit markets. Borrowers without established credit histories have incentives to repudiate their debt obligations, and are therefore unable to issue debt directly. Banks exist in order to provide finance for this class of borrowers. Banks can curtail borrowers' incentives to default on debt by building a reputation for liquidating defaulters. However, over time, borrowers' concerns about reputation improve their incentives, such that they are able to issue debt directly.

Suggested Citation

  • Bijapur, M., 2000. "Borrower and Lender Reputation Effects: A New Theory of Financial Intermediation," Discussion Papers 0018, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:0018
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below 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.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Murat Usman, 2004. "Optimal Debt Contracts with Renegotiation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 755-776, December.

    More about this item

    Keywords

    CREDIT ; MARKET ; DEBT ; LIQUIDITY;
    All these keywords.

    JEL classification:

    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:exe:wpaper:0018. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sebastian Kripfganz (email available below). General contact details of provider: https://edirc.repec.org/data/deexeuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.