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Please use this identifier to cite or link to this item: http://hdl.handle.net/10466/987

Title: <ARTICLE>Noisy Signals, Credit Rationing, and Bank Asset Quality : Internal Fragility of Banking Industry
Authors: Kuroki, Yoshihiro
Issue Date: 1999
Publisher: College of Economics, Osaka Prefecture University
Citation: Journal of economics, business and law. 1999, 1, p.33-69
Abstract: In the presence of asymmetric information, banking industry is internally fragile and can cause hostile environments in the economy without economy-wide adverse shock such as debt deflation. Banks' asset quality can deteriorate even when banks ration funds away from risky borrowers. The situation is very serious when banks are myopic and/or their monitoring technology is in-efficient. The contingent contract based on the borrower's quality choice is no more feasible and banks keep lending based only on the inexpensive information. These results are derived under more realistic assumptions than those in the recent literature. JEL Classification : E44 G14 G21
URI: http://hdl.handle.net/10466/987
Appears in Collections:VOLUME 1

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