Finance Papers

Document Type

Journal Article

Date of this Version

11-2014

Publication Source

Journal of Economic Theory

Volume

154

Start Page

633

Last Page

667

DOI

10.1016/j.jet.2014.06.003

Abstract

Using a theoretical model that incorporates asymmetric information and differing comparative advantages among lenders, this paper analyzes the impact of lender entry on credit access and aggregate net output. The model shows that lender entry has the potential to create a segmented market that increases credit access for those firms targeted by the new lenders but potentially reduces credit access for all other firms. The overall impact on net output depends on the distribution of firms, the relative costs of lenders, and the cost of acquiring information. The model provides new insights into the evidence regarding foreign lenders' entry into emerging markets.

Copyright/Permission Statement

© 2014. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.

Embargo Date

11-2017

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Date Posted: 27 November 2017

This document has been peer reviewed.