The authors investigate how transparency affects the probability of a financial crisis. They construct a model in which banks cannot distinguish between aggregate shocks and government policy, on the one hand, and firm' quality, on the other. Banks may therefore overestimate firms' returns and increase credit above the level that would be optimal given the firms' returns. Once banks discover their large exposure, they are likely to roll over loans...
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INFORMACIÓN
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2000/02/29
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Documento de trabajo sobre investigaciones relativas a políticas
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WPS2286
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1
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1
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2010/07/01
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Transparency, liberalization, and banking crisis
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cross country experience