Financial Intermediaries as Markets for Firm Assets

Bibliographic Data

ID9708191
AuthorsLuis Araujo (0000-0002-5742-6323, Michigan State University), Raoul Minetti (0000-0001-7402-9488, Michigan State University)
Year2007
Volume117
Issue523
Pages1380-1402
Publication date2007-10-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2007.02087.x
OpenAlexW2009252497
LanguageEN
References cited18

This article proposes a theory of financial intermediation based on intermediaries' role in the reallocation of assets of distressed firms. The article suggests that intermediaries aggregate information on firms in credit relationships and use this information to facilitate asset reallocation across firms. However, this role of intermediaries hinges on debt contracts that grant lenders the right to foreclose assets of distressed borrowers and, hence, exclude the most productive asset users from the resale market. We characterise conditions under which intermediaries arise and under which their role in the credit market enhances their role as markets for firm assets. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007

Business · Economic history · Economics · Financial intermediary · Financial system · Intermediary · Library science · Management · State (computer science · Banking stability, regulation, efficiency · Computer Science · Corporate Finance and Governance · Economic theories and models · Finance

Tools

Open DOISci-Hub