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The volume of credit extended by a bank can be an informative signal of its abilities in loan selection and management. It is shown that, under asymmetric information, banks may therefore rationally lend more than they would otherwise in order to demonstrate their quality, thus negatively affecting financial system soundness. Small shifts in technology and uncertainty associated with new technology may lead to large jumps in equilibrium outcomes. Prudential measures and supervision are therefore warranted.

Bank loans --- Econometric models. --- Bank credit --- Loans --- Banks and Banking --- Money and Monetary Policy --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Innovation --- Research and Development --- Technological Change --- Intellectual Property Rights: General --- Monetary economics --- Banking --- Finance --- Technology --- general issues --- Credit --- Banks and banking --- United States

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This paper derives an equilibrium for a competitive multi-stage game in which an agents' current action influences his probability of survival into the next round of play. This is directly relevant in banking, where a banks' current lending and pricing decisions determines its future probability of default. In technical terms, our innovation is to consider a multi-stage game with endogenous discounting. An equilibrium for such a multi-stage game with endogenous discounting has not been derived before in the literature.

Game theory. --- Competition --- Equilibrium (Economics) --- Mathematical models. --- Disequilibrium (Economics) --- Economic equilibrium --- General equilibrium (Economics) --- Partial equilibrium (Economics) --- Games, Theory of --- Theory of games --- DGE (Economics) --- DSGE (Economics) --- Dynamic stochastic general equilibrium (Economics) --- SDGE (Economic theory) --- Economics --- Statics and dynamics (Social sciences) --- Mathematical models --- Mathematics --- Banks and Banking --- Finance: General --- Macroeconomics --- Environmental Economics --- Price Level --- Inflation --- Deflation --- General Financial Markets: General (includes Measurement and Data) --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Environmental Economics: General --- Finance --- Banking --- Environmental economics --- Asset prices --- Environment --- Prices --- Banks and banking --- Environmental sciences

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Using a simple model of two-sided markets, we show that, in the social optimum, platform pricing leads to an inherent cost recovery problem. This result is driven by the positive externality of participation that users on either side of the market exert on the opposite side. The contribution of this positive externality to social welfare leads the social planner to increase users' participation by setting prices at both sides of the market such that the total price is below marginal cost. This causes operational losses for the platform. Our result holds for both interior pricing and skewed pricing in two-sided markets.

Competition, International. --- Electronic books. -- local. --- Markets. --- Prices. --- Finance: General --- Macroeconomics --- Economic Theory --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Market Structure, Firm Strategy, and Market Performance: General --- Monopolization --- Horizontal Anticompetitive Practices --- Price Level --- Inflation --- Deflation --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Economic theory & philosophy --- Finance --- Price structures --- Demand elasticity --- Price elasticity --- Payment systems --- Elasticity --- Economics --- Clearinghouses --- Banking

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This SDN explores how demographic changes have affected and will affect public and private sector savings, highlighting the interaction between pension systems, labor markets, and demographic variables.