D82 - Asymmetric and Private Information; Mechanism Design

• Liquidity Transformation and Bank Capital Requirements

  Staff Working Paper 2010-22 Hajime Tomura

  This paper presents a dynamic general equilibrium model where asymmetric information about asset quality leads to asset illiquidity. Banking arises endogenously in this environment as banks can pool illiquid assets to average out their idiosyncratic qualities and issue liquid liabilities backed by pooled assets whose total quality is public information.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Financial system regulation and policies JEL Code(s): D, D8, D82, E, E4, E44, G, G2, G21

• The Role of Foreign Exchange Dealers in Providing Overnight Liquidity

  Staff Working Paper 2008-44 Chris D'Souza

  This paper illustrates that dealers in foreign exchange markets not only provide intraday liquidity, they are key participants in the provision of overnight liquidity. Dealing institutions receive compensation for holding undesired inventory balances in part from the information they receive in customer trades.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Financial markets, Market structure and pricing JEL Code(s): D, D8, D82, F, F3, F31, G, G2, G21

• A Search Model of Venture Capital, Entrepreneurship, and Unemployment

  Staff Working Paper 2005-24 Robin Boadway, Oana Secrieru, Marianne Vigneault

  The authors develop a search model of venture capital in which the number of successful matches of entrepreneurs and venture capitalists (VCs) at any moment in time is a function of the number of entrepreneurs searching for funds, the number of VCs searching for entrepreneurs, and the number of vacancies posted by each VC.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Fiscal policy, Labour markets JEL Code(s): D, D8, D82, G, G1, G18, G2, G24, H, H2, H21, J, J6, J64

• Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion

  Staff Working Paper 2005-23 Raphael Solomon

  The author describes a model with a corrupt banking system, in which bankers knowingly lend at market interest rates to back projects riskier than the market rate indicates.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial stability JEL Code(s): D, D8, D82, G, G1, G19, G2, G21

• Determinants of Borrowing Limits on Credit Cards

  Staff Working Paper 2005-7 Shubhasis Dey, Gene Mumy

  The difference between actual borrowings and borrowing limits alone generates information asymmetry in the credit card market.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Market structure and pricing JEL Code(s): C, C3, D, D4, D8, D82