Asymmetric information and the automobile loan market

Sumit Agarwal, Brent William Ambrose, Souphala Chomsisengphet

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Citation (Scopus)

Abstract

Information revelation can occur through a variety of mechanisms. For example, corporate finance research has established that a firm’s dividend policies provide investors with information about future growth prospects.1 In addition, research on residential mortgages indicates that borrowers reveal their expected tenure through their choice of mortgage contracts.2 As a result, lenders offer a menu of mortgage interest rate and point combinations in an effort to learn about borrower potential mobility.3 Similarly, lenders may anticipate how consumer debt will perform by observing the consumption choices that are being financed. With the proliferation of risk-based pricing in credit markets, lender’s ability to further differentiate between borrower credit risks, based on consumer choice of goods, offers lenders a potentially important source to enhance profitability, as well as the potential to extend credit to a wider range of borrowers.4.

Original languageEnglish (US)
Title of host publicationHousehold Credit Usage
Subtitle of host publicationPersonal Debt and Mortgages
PublisherPalgrave Macmillan
Pages93-116
Number of pages24
ISBN (Electronic)9780230608917
ISBN (Print)9781403983923
DOIs
StatePublished - Jan 1 2007

Fingerprint

Automobile
Asymmetric information
Mortgages
Loans
Pricing
Consumer debt
Interest rates
Tenure
Corporate finance
Investors
Dividend policy
Menu
Consumer choice
Credit risk
Profitability
Proliferation
Credit
Information revelation
Credit markets

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

Cite this

Agarwal, S., Ambrose, B. W., & Chomsisengphet, S. (2007). Asymmetric information and the automobile loan market. In Household Credit Usage: Personal Debt and Mortgages (pp. 93-116). Palgrave Macmillan. https://doi.org/10.1057/9780230608917_6
Agarwal, Sumit ; Ambrose, Brent William ; Chomsisengphet, Souphala. / Asymmetric information and the automobile loan market. Household Credit Usage: Personal Debt and Mortgages. Palgrave Macmillan, 2007. pp. 93-116
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Agarwal, S, Ambrose, BW & Chomsisengphet, S 2007, Asymmetric information and the automobile loan market. in Household Credit Usage: Personal Debt and Mortgages. Palgrave Macmillan, pp. 93-116. https://doi.org/10.1057/9780230608917_6

Asymmetric information and the automobile loan market. / Agarwal, Sumit; Ambrose, Brent William; Chomsisengphet, Souphala.

Household Credit Usage: Personal Debt and Mortgages. Palgrave Macmillan, 2007. p. 93-116.

Research output: Chapter in Book/Report/Conference proceedingChapter

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Agarwal S, Ambrose BW, Chomsisengphet S. Asymmetric information and the automobile loan market. In Household Credit Usage: Personal Debt and Mortgages. Palgrave Macmillan. 2007. p. 93-116 https://doi.org/10.1057/9780230608917_6