search query: @author Shi, S. / total: 12
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| Author: | Cao, M. Shi, S. |
| Title: | Screening, Bidding, and the Loan Market Tightness |
| Journal: | European Finance Review
2001 : VOL. 5:1-2, p. 21-61 |
| Index terms: | LOANS MARKETS BIDDING ANALYTICAL REVIEW |
| Language: | eng |
| Abstract: | Bank loans are more available and cheaper for new and small businesses in the U.S. in concentrated banking areas than in competitive banking areas. The authors explain this anomaly by analyzing banks' decisions to screen projects and their competition in loan provisions. It is shown that, by exacerbating the winner's curse, an increase in the number of banks can reduce banks' screening probability by so much that the number of banks that actively compete in loan provisions falls and the expected loan rate rises. This is the case when the screening cost is low, which induces all active bidders to be informed. |
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