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Credit Markets with Adverse Selection and
Economic Development. Edition No. 1
VDM Publishing House, Nov 2008, Pages: 100
Although it is generally accepted that the presence
of imperfect information in credit markets distorts
the allocation of investment capital in the economy,
no agreement has yet been reached in favour of
government intervention in such markets to foster
economic development. This work uses microeconomic
foundations to develop a theoretical framework to
illustrate a channel through which adverse selection
in credit markets can affect economic growth. Does
the lack of collateral can alter the
incentives of credit-constrained entrepreneurs to
make effort to innovate and to improve their
investment projects? Under this model a case for
government intervention might exist. However, the
intervention might be quite different from those
commonly observed in practice. This book is intended
for students, researchers and practitioners, with
some background in microeconomics, contract theory
and game theory, who are interested in studying the
rationale for government intervention in credit
markets for developmental purposes.
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