Cover IMF Working Papers
Innovation in Banking and Excessive Loan Growth
Author:
International Monetary Fund
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Series:
IMF Working Papers
Volume/Issue:
Volume 2008: Issue 188
Language:
English
Publication Date:
01 Jul 2008
DOI:
https://doi.org/10.5089/9781451870466.001
ISBN:
9781451870466
ISSN:
1018-5941
Pages:
28
Keywords:
WP; loan technology; low-technology bank
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The volume of credit extended by a bank can be an informative signal of its abilities in loan selection and management. It is shown that, under asymmetric information, banks may therefore rationally lend more than they would otherwise in order to demonstrate their quality, thus negatively affecting financial system soundness. Small shifts in technology and uncertainty associated with new technology may lead to large jumps in equilibrium outcomes. Prudential measures and supervision are therefore warranted.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2008: Issue 188