Loan sales under asymmetric information

Citation data:

UNIVERSIDAD DEL ROSARIO, DOCUMENTOS DE TRABAJO, No: 006827

Publication Year:
2010
Usage 394
Abstract Views 330
Downloads 64
Repository URL:
http://repository.urosario.edu.co/handle/10336/10829
RePec URLs:
https://ideas.repec.org/p/col/000092/006827.html
Author(s):
Vargas Martínez, Mónica
Publisher(s):
Facultad de Economía; Universidad del Rosario
Tags:
332.1753; Inversiones::Modelos Matemáticos; Liquidez (Economía); Valores; Instituciones financieras; Préstamos::Modelos Matemáticos; Loan Sales; Asymmetric Information; Liquidity; Securitization; Loan Sales, Asymmetric Information, Liquidity, Securitization; Inversiones -- Modelos matemáticos; Préstamos -- Modelos matemáticos
paper description
Loans are illiquid assets that can be sold in a secondary market even that buyers have no certainty about their quality. I study a model in which a lender has access to new investment opportunities when all her assets are illiquid. To raise funds, the lender may either borrow using her assets as collateral, or she can sell them in a secondary market. Given asymmetric information about assets quality, the lender cannot recover the total value of her assets. There is then a role for the government to correct the information problem using fiscal tools.