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Market efficiency

C/F/788. Asymmetric information in banking: screening techniques to minimize its risk

WORDS:
2400
DATE:
2010
PRICE:
29.99 GBP

The paper examines the forms of information asymmetry (IA), i.e. adverse selection, moral hazard and monitoring costs. IA causes are explained with reference to Adam Smith’s theory of market efficiency. The outcomes of asymmetric information in banking are considered describing screening tools used to minimize the risk of asymmetric information, the concept of pareto efficient outcome is explained.

 

KEYWORDS: Asymmetric Information, Banking, Screening techniques, pareto efficient, market efficiency,

 
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