+7 925 966 4690, 9am6pm (GMT+3), Monday – Friday
ИД «Финансы и кредит»

JOURNALS

  

FOR AUTHORS

  

SUBSCRIBE

    
Finance and Credit
 

Information asymmetry and the balance of interests of banks, their customers and the economy

Vol. 29, Iss. 3, MARCH 2023

Received: 26 December 2022

Received in revised form: 9 January 2023

Accepted: 23 January 2023

Available online: 30 March 2023

Subject Heading: Banking

JEL Classification: G21, D43

Pages: 601–622

https://doi.org/10.24891/fc.29.3.601

Vladimir D. SMIRNOV Financial University under Government of Russian Federation, Moscow, Russian Federation
vdsmirnov@fa.ru

https://orcid.org/0000-0002-1243-5349

Subject. The article analyzes the imbalance of interests of banks and their clients in connection with information asymmetry.
Objectives. The aims include improving the efficiency of the banking market of the Russian Federation to enhance its support to economic development, working out proposals to reduce the imbalance of interests of banks and their customers so that the latter achieve their goals, perfecting risk management in banks.
Methods. The study draws on logical and systems approaches, general scientific methods of analysis and synthesis of empirical data, comparative analysis of theoretical approaches to consideration of problems.
Results. The concentration of capital in a handful of banks in any country market does not promote competition development, customer service quality improvement, enhanced contribution of the banking system to the development of the economy through credit support. The findings can be used by the banking market participants, public authorities, research and educational organizations when considering options for the development of the banking industry.
Conclusions. The relationship of banks and clients should be based on generation of revenues and profit through assisting customers to achieve their goals, rather than on simple sale of banking products. In this case, banks can receive maximum information for adequate assessment of risks related to the service. This approach is beneficial for both parties and is applicable for building relationships between individual banks with retail and corporate customers, and the banking system as a whole with the non-financial sector of the economy.

Keywords: information asymmetry, competition, bank, balance of interests, business objectives

References:

  1. Hodgman D.R. The deposit relationship and commercial bank investment behavior. The Review of Economics and Statistics, 1961, vol. 43, no. 3, pp. 257–268. URL: Link
  2. Fama E.F. What’s different about banks? Journal of Monetary Economics, 1985, vol. 15, iss. 1, pp. 29–39. URL: Link90051-0
  3. Sharpe S.A. Asymmetric information, bank lending and implicit contracts: A stylized model of customer relationships. The Journal of Finance, 1990, vol. 45, iss. 4, pp. 1069–1087. URL: Link
  4. Rajan R.G. Insiders and outsiders: The choice between informed and arm's-length debt. The Journal of Finance, 1992, vol. 47, iss. 4, pp. 1367–1400. URL: Link
  5. Dell’Ariccia G. Asymmetric information and the market structure of the banking industry. IMF Working Paper, 1998, no. 1998/092. URL: Link
  6. Stiglitz J.E., Weiss A. Credit rationing in markets with imperfect information. The American Economic Review, 1981, vol. 71, no. 3, pp. 393–410. URL: Link
  7. Berger A.H., Hannan T.H. The efficiency cost of market power in the banking industry: A test of the “quiet life” and related hypotheses. The Review of Economics and Statistics, 1998, vol. 80, no. 3, pp. 454–465.
  8. Crawford G.S., Pavanini N., Schivardi F. Asymmetric information and imperfect competition in lending markets. The American Economic Review, 2018, vol. 108, no. 7, pp. 1659–1701. URL: Link
  9. Allen F., Gale D. Competition and financial stability. Journal of Money, Credit and Banking, 2004, vol. 36, no. 3, part 2, pp. 453–480. URL: Link
  10. Hoggarth G., Reis R., Saporta V. Costs of banking system instability: Some empirical evidence. Journal of Banking & Finance, 2002, vol. 26, iss. 5, pp. 825–855. URL: Link00268-0
  11. Deryugina E., Ponomarev A., Sinyakov A. [Relationship between the structure of the deposit and credit markets in the digital economy: The role of information asymmetry]. Bank Rossii. Seriya dokladov ob ekonomicheskikh issledovaniyakh = Bank of Russia. Economic Research Report Series, 2021, no. 78. URL: Link (In Russ.)
  12. Bouckaert J., Degryse H. Entry and strategic information display in credit markets. The Economic Journal, 2006, vol. 116, no. 513, pp. 702–720. URL: Link
  13. Boot A.W.A., Thakor A.V. Can Relationship Banking Survive Competition? The Journal of Finance, 2000, vol. 55, iss. 2, pp. 679–713. URL: Link
  14. Govtvan' O.Dzh. [Monetary constraints on economic growth in Russia]. Problemy prognozirovaniya = Problems of Forecasting, 2020, no. 6, pp. 81–91. URL: Link (In Russ.)
  15. Neuberger D. What’s common to relationship banking and relationship investing? Reflections within the contractual theory of the firm. SSRN Electronic Journal, 2005. URL: Link or Link
  16. Boot A.W.A. Relationship banking: What do we know? Journal of Financial Intermediation, 2000, vol. 9, iss. 1, pp. 7–25. URL: Link
  17. Degryse H., Ongena S. Bank relationship and firm profitability. Financial Management, 2001, vol. 30, no. 1, pp. 9–34. URL: Link
  18. Donker H., Ng A., Shao P. Borrower Distress and the Efficiency of Relationship Banking. Journal of Banking & Finance, 2020, vol. 112. URL: Link
  19. Guo Y., Holland J., Kreander N. An exploration of the value creation process in bank-corporate communications. Journal of Communication Management, 2014, vol. 18, no. 3, pp. 254–270. URL: Link

View all articles of issue

 

ISSN 2311-8709 (Online)
ISSN 2071-4688 (Print)

Journal current issue

Vol. 30, Iss. 3
March 2024

Archive