Business, Management and Accounting
4 years ago

Local lenders benefit while entrepreneurs take on safer projects in dual financial market.

Risk and Intermediation in a Dual Financial Market Economy
Gaetano Bloise, Pietro Reichlin

Paper Summary

Related papers

Economics, Econometrics and Finance
4 years ago

Financial innovation transforms traditional banking, creating new risks and opportunities.

Banking Finance
Insurance Dynamics
Credit Expansion
1 view
Economics, Econometrics and Finance
7 years ago

Credit reporting technology leads to shorter loan terms and reduced financing for risky borrowers.

Banking Finance
Corporate Governance
Islamic Banking
Economics, Econometrics and Finance
8 years ago

Colombia's Development Bank Boosts Access to Credit for Businesses.

Banking Finance
Microfinance
Macroeconomic Trends

The article examines how different types of lenders affect the risk and financing choices of entrepreneurs in a financial market. Local lenders offer exclusive loans to entrepreneurs, while financial intermediaries provide loans without quantity limits. Entrepreneurs tend to choose safer projects due to the risk imposed by intermediation costs, leading local lenders to diversify their portfolios. Financial intermediaries benefit from credit diversification.