search query: @indexterm Credit / total: 493
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Author: | Iossa, E. Palumbo, G. |
Title: | Product quality, lender liability, and consumer credit |
Journal: | Oxford Economic Papers
2004 : APR, VOL. 56:2, p. 331-343 |
Index terms: | Finance Consumers Credit Liability Products Quality |
Language: | eng |
Abstract: | Under 'linked credit', also known as 'connected lending', the buyer obtains a loan from a lender with the specific purpose of purchasing a certain product. Credit is arranged directly by the seller, who acts as an intermediary for the finance company. Within this form of financing, the lender often accepts a measure of liability for defective products. This study shows that 'connected-lender liability' can work as a signalling device for the reliability of sellers, so as to alleviate the market failure that arises when sellers are better informed than consumers about the quality of their products. |
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