000			03058cam a22003497 4500
001			w10571
003			NBER
005			20211020112748.0
006			m o d
007			cr cnu||||||||
008			210910s2004 mau fo 000 0 eng d
100	1		_aBolton, Patrick.
245	1	0	_aConflicts of Interest, Information Provision, and Competition in Banking / _cPatrick Bolton, Xavier Freixas, Joel Shapiro.
260			_aCambridge, Mass. _bNational Bureau of Economic Research _c2004.
300			_a1 online resource: _billustrations (black and white);
490	1		_aNBER working paper series _vno. w10571
500			_aJune 2004.
520	3		_aIn some markets, such as the market for drugs or for financial services, sellers have better information than buyers regarding the matching between the buyer's needs and the good's actual characteristics. Depending on the market structure, this may lead to conflicts of interest and/or the under-provision of information by the seller. This paper studies this issue in the market for financial services. The analysis presents a new model of competition between banks, as banks' price competition influences the ensuing incentives for truthful information revelation. We compare two different firm structures, specialized banking, where financial institutions provide a unique financial product, and one-stop banking, where a financial institution is able to provide several financial products which are horizontally differentiated. We show first that, although conflicts of interest may prevent information disclosure under monopoly, competition forces full information provision for sufficiently high reputation costs. Second, in the presence of market power, one-stop banks will use information strategically to increase product differentiation and therefore will always provide reliable information and charge higher prices than specialized banks, thus providing a new reason for the creation of one-stop banks. Finally, we show that, if independent financial advisers are able to provide reliable information, this increases product differentiation and therefore market power, so that it is in the interest of financial intermediaries to promote external independent financial advice.
530			_aHardcopy version available to institutional subscribers
538			_aSystem requirements: Adobe [Acrobat] Reader required for PDF files.
538			_aMode of access: World Wide Web.
588	0		_aPrint version record
690		7	_aG2 - Financial Institutions and Services _2Journal of Economic Literature class.
690		7	_aL1 - Market Structure, Firm Strategy, and Market Performance _2Journal of Economic Literature class.
700	1		_aFreixas, Xavier. _910738
700	1		_aShapiro, Joel.
710	2		_aNational Bureau of Economic Research.
830		0	_aWorking Paper Series (National Bureau of Economic Research) _vno. w10571.
856	4	0	_uhttps://www.nber.org/papers/w10571
856			_yAcceso en línea al DOI _uhttp://dx.doi.org/10.3386/w10571
942			_2ddc _cW-PAPER
999			_c337599 _d296161