702 B
702 B
Bank Information Asymmetry
Definition
The situation where banks have better information about borrowers and investments than other market participants, which can affect credit allocation and risk assessment. Managing this asymmetry is crucial for effective banking.
Source Chapter
Book II, Chapter 2
Context
Smith analyses how information asymmetry affects banking operations and credit allocation. He shows how banks must develop methods to assess creditworthiness and manage the risks associated with information asymmetry.
Economic Domain
Exchange