Resource title

Credit Risk Transfer, Real Sector Productivity, and Financial Deepening

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image for OpenScout resource :: Credit Risk Transfer, Real Sector Productivity, and Financial Deepening

Resource description

We derive the effects of credit risk transfer (CRT) markets on real sector productivity and on the volume of financial intermediation in a model where banks choose their optimal degree of CRT and monitoring. We find that CRT increases productivity in the up-market real sector but decreases it in the low-end segment. If optimal, CRT unambiguously fosters financial deepening, i.e., it reduces creditrationing in the economy. These effects rely upon the ability of banks to commit to the optimal CRT at the funding stage. The optimal degree of CRT depends on the combination of moral hazard, general riskiness, and the cost of monitoring in nonmonotonic ways.

Resource author

Patrick Behr, Samuel Lee

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/23418

Resource license

Adapt according to the presented license agreement and reference the original author.