23 research outputs found
Auctions Where Incomes Are Private Information and Preferences (Non Quasi-linear) Are Common Knowledge
Vertical linkage between formal and informal credit markets: corruption and credit subsidy policy
We develop a model of vertical linkage between the formal and informal credit markets which highlights the presence of corruption in the distribution of formal credit. The existing moneylender, the bank official and the new moneylenders move sequentially and the existing moneylender acts as a Stackelberg leader and unilaterally decides on the informal interest rate. The analysis distinguishes between two different ways of designing a credit subsidy policy. If a credit subsidy policy is undertaken through an increase in the supply of institutional credit, it is likely to increase the competitiveness in the informal credit market and lower the informal sector interest rate under reasonable parametric restrictions. Any change in the formal sector interest rate has no effect. However, an anticorruption measure (increase in penalty) unambiguously lowers the interest rate in the informal credit market. Finally, we examine the effects of alternative policies on the incomes of different economic agents in our model.Formal/informal credit markets, informal interest rate; corruption; credit subsidy policy
Corruption in a Model of Vertical Linkage between Formal and Informal Credit Sources and Credit Subsidy Policy
The present paper develops a model of vertical linkage between the formal and informal credit markets highlighting the presence of corruption in the distribution of formal credit. The existing moneylender, the bank official and the new moneylenders move sequentially and the existing moneylender acts as a Stackelberg leader and unilaterally decides on the informal interest rate. The analysis distinguishes between two different ways of designing a credit subsidy policy. If a credit subsidy policy is undertaken through an increase in the supply of institutional credit it is likely to increase the competitiveness in the informal credit market and lower the informal sector interest rate under reasonable parametric restrictions. Any change in the formal sector interest rate has no effect. An anticorruption measure, on the contrary, may be counterproductive and raise the interest rate in the informal credit market.formal/informal credit markets, interest rates
Corruption in a Model of Vertical Linkage between Formal and Informal Credit Sources and Credit Subsidy Policy
The present paper develops a model of vertical linkage between the formal and informal credit markets highlighting the presence of corruption in the distribution of formal credit. The existing
moneylender, the bank official and the new moneylenders move sequentially and the existing
moneylender acts as a Stackelberg leader and unilaterally decides on the informal interest rate.
The analysis distinguishes between two different ways of designing a credit subsidy policy. If a
credit subsidy policy is undertaken through an increase in the supply of institutional credit it is
likely to increase the competitiveness in the informal credit market and lower the informal sector
interest rate under reasonable parametric restrictions. Any change in the formal sector interest
rate has no effect. An anticorruption measure, on the contrary, may be counterproductive and
raise the interest rate in the informal credit market
Vertical Linkage between Formal and Informal Credit Markets, Corruption and Credit Subsidy policy: A Note
We develop a model of vertical linkage between the formal and informal credit markets which highlights the presence of corruption in the distribution of formal credit. The existing moneylender, the bank official and the new moneylenders move sequentially and the existing moneylender
acts as a Stackelberg leader and unilaterally decides on the informal interest rate. The analysis distinguishes between two different ways of designing a credit subsidy policy. If a credit subsidy policy is undertaken through an increase in the supply of institutional credit, it is likely to increase the competitiveness in the informal credit market and lower the informal sector interest rate under reasonable parametric restrictions. Any change in the formal sector interest rate has no effect. However, an anticorruption measure (increase in penalty) unambiguously lowers the interest rate in the informal credit market. Finally, we examine the effects of alternative policies on the incomes of different economic agents in our model
Corruption in union leadership
This note develops a model of two stage game between a corrupt trade union leader and the management of the firm where the former negotiates for the wage of the workers with
the firm. The firm bribes the leader so that he keeps the wage as close as possible to the workers’ reservation wage. The analysis leads to some interesting results which are important for anticorruption policy formulation
Vertical linkage between formal and informal credit markets: corruption and credit subsidy policy
We develop a model of vertical linkage between the formal and informal credit markets which highlights the presence of corruption in the distribution of formal credit. The existing moneylender, the bank official and the new moneylenders move sequentially and the existing moneylender acts as a Stackelberg leader and unilaterally decides on the informal interest rate. The analysis distinguishes between two different ways of designing a credit subsidy policy. If a credit subsidy policy is undertaken through an increase in the supply of institutional credit, it is likely to increase the competitiveness in the informal credit market and lower the informal sector interest rate under reasonable parametric restrictions. Any change in the formal sector interest rate has no effect. However, an anticorruption measure (increase in penalty) unambiguously lowers the interest rate in the informal credit market. Finally, we examine the effects of alternative policies on the incomes of different economic agents in our model
Corruption in union leadership
This note develops a model of two stage game between a corrupt trade union leader and the management of the firm where the former negotiates for the wage of the workers with
the firm. The firm bribes the leader so that he keeps the wage as close as possible to the workers’ reservation wage. The analysis leads to some interesting results which are important for anticorruption policy formulation