Zusammenfassung
Financial intermediaries are, by definition, engaged in two-sided competition. Despite the well-known problems of achieving competitive solutions under two-sided price competition, models of financial intermediation are commonly solved for competitive equilibria. This article provides a game-theoretic foundation for competitive equilibria in one of the most important models of financial ...
Zusammenfassung
Financial intermediaries are, by definition, engaged in two-sided competition. Despite the well-known problems of achieving competitive solutions under two-sided price competition, models of financial intermediation are commonly solved for competitive equilibria. This article provides a game-theoretic foundation for competitive equilibria in one of the most important models of financial intermediation, the seminal StiglitzWeiss (1981) adverse selection model of the credit market with a continuum of borrower types.