00000nam 2200000zi 4500 9.882837 CaOODSP 20221107170413 m o d f cr cn||||||||| 191212t20192019oncd obs f000 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-5/2019-47E-PDF Ahnert, Toni, author. Loan insurance, market liquidity, and lending standards / by Toni Ahnert and Martin Kuncl. [Ottawa] : Bank of Canada = Banque du Canada, 2019. ©2019 1 online resource (ii, 58 pages) : figures, charts (some colour). text txt rdacontent computer c rdamedia online resource cr rdacarrier Bank of Canada staff working paper, 1701-9397 ; 2019-47 "December 2019." Includes bibliographical references (page 40). "We examine insurance against loan default when lenders can screen in primary markets at a heterogeneous cost and learn loan quality over time. In equilibrium, low-cost lenders screen loans, but some high-cost lenders insure them. Insured loans are risk-free and liquid in a secondary market, while uninsured loans are subject to adverse selection. Loan insurance reduces the amount of lemons traded in the secondary market for uninsured loans, improves liquidity, and lowers lending standards. This pecuniary externality implies insufficient loan insurance in the liquid equilibrium. Therefore, a regulator achieves constrained efficiency by imposing a Pigouvian subsidy on loan insurance"--Abstract, page ii. Credit insurance. Assurance-crédit. Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2019-47. (CaOODSP)9.806221 PDF 2.05 MB https://publications.gc.ca/collections/collection_2019/banque-bank-canada/FB3-5-2019-47-eng.pdf