Objective
This project aims at exploring the macroeconomic implications of agents' behaviours in credit markets where information is not perfectly distributed. Many recent studies emphasized the relationship between asymmetric information in loan relationships and aggregate outcomes. These researches share the conviction that the way in which entrepreneurs decide to finance their production activities, interact with financial institutions, and define contractual agreements is a relevant source of economic inefficiencies a s well as a major cause of business fluctuations.
Our main target is to contribute to these studies introducing a formal mechanism design analysis of lender-borrower relationships. We plan to develop two main lines of investigation. First, we will emphasize the role of credit market imperfections in macroeconomic models where agents are allowed to choose their optimal financial arrangements. As a consequence, asymmetric information in the credit market can be responsible for the existence of business fluctuations and, at the same time, fluctuations can influence the nature of firms' financing over time. This intuition might provide important extensions of traditional Corporate Finance theories that relate firms' capital structure only to the characteristics of agency costs under asymmetric information. Second, we will focus on the analysis of credit markets where multiple lenders are strategically competing over their contract offers to entrepreneurs/borrowers.
Emphasis will be given to the construction of theoretical schemes that enable to characterize the relevant credit market equilibria and to understand their efficiency properties. If asymmetric information is a persistent feature of credit relationships, then market equilibria may fail to achieve even Pareto-constrained efficiency. Our research will try to develop a welfare-based foundation for policy interventions in market economies with incentive problems.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
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Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
FP6-2002-MOBILITY-5
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Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Coordinator
TOULOUSE
France
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.