By Evan Tarver Updated Aug 22, Financial markets exhibit asymmetric information in that in a financial transaction, one of the two parties involved will have more information than the other and will have the ability to make a more informed decision. When it comes to the purchase or sale of a financial security , asymmetric information occurs when either the buyer or seller has more information on the past, present or future performance of that financial security. If the seller has more information, he knows the security is overpriced. When it comes to borrowing or lending money, asymmetric information occurs when the borrower has more information about his financial state than the lender does.
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Ricardo N. Bebczuk Abstract Asymmetric information the fact that borrowers have better information than their lenders and its theoretical and practical evidence now forms part of the basic tool kit of every financial economist. It is a phenomenon that has major implications for a number of economic and financial issues ranging from both micro and macroeconomic level - corporate debt, investment and dividend policies, the depth and duration of business cycles, the rate of long term economic growth - to the origin of financial and international crises.
Asymmetric Information in Financial Markets aims to explain this concept in an accessible way, without jargon and by reducing mathematical complexity. Using elementary algebra and statistics, graphs, and convincing real-world evidence, the author explores the foundations of the problems posed by asymmetries of information in a refreshingly accessible and intuitive way.
Suggested Citation Bebczuk,Ricardo N. Handle: RePEc:cup:cbooks as Download full text from publisher To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below whether another version of this item is available online.
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How Do Financial Markets Exhibit Asymmetric Information?
Badal Separate different tags with a comma. Ships from the UK. Spine free of vertical creases. Citations are based on reference standards. Asymmetric information and international capital flows. This book is extremely accessible and fills an important gap in the market. These 16 locations in All: In practice this rarely happens and in most cases agents have access to different levels of information so that transactions are characterized by asymmetric information.
Asymmetric Information in Financial Markets
Asymmetric Information in Financial Markets: Introduction and Applications