Good Co(o)p or Bad Co(o)p? Redistribution Concerns and Competition in Credit Markets with Imperfect Information
| Autor: | Marcello D'Amato, Mariafortuna Pietroluongo, Christian Di Pietro, Marco M. Sorge |
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| Rok vydání: | 2021 |
| Předmět: |
Economics and Econometrics
050208 finance Cross subsidization Imperfect information 05 social sciences Economics Econometrics and Finance (miscellaneous) Perfect information Credit markets Financial cooperatives Monetary economics Redistribution (cultural anthropology) Variety (cybernetics) Competition (economics) Credit rationing 0502 economics and business Market power Business 050207 economics Market share |
| Popis: | Non-profit organizations (NPOs), such as financial cooperatives, have a longstanding tradition in advanced market economies. We develop a model of ‘mixed credit markets’ where pure for-profit institutions (e.g. commercial banks) can coexist with financial NPOs which feature a concern for inter-member surplus redistribution (e.g. credit cooperatives) and enjoy privileged borrower-specific information vis-à-vis their for-profit peers, while facing higher funding costs. We formally investigate market competition between the two alternative financial organizations both offering contracts whose terms entail cross subsidization. We argue that heterogeneity in organizational models can explain stable coexistence under competitive conditions, and also help us interpret the variety of market outcomes — in terms of e.g. overall coverage and market shares — as documented in modern financial systems. Importantly, the viability of redistribution-oriented NPOs is shown not to rest on under-investment issues or concerns about market power, for they can successfully operate in markets where credit rationing never arises. |
| Databáze: | OpenAIRE |
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