Dr Andreas Krause will discuss the development of his model, showing how the ability to repay a loan is private information that can only be verified by the bank at some costs, which can be recovered from the borrower if it has reported untruthfully. He will examine how the banks optimize the resources they spend on this auditing of borrowers, as well as looking at the banks' limited liability and punitive cost to borrowers.
About the Speaker
Dr Andreas Krause is an Assistant Professor in Economics at the University of Bath. His research interests are financial markets and asset price dynamics. He was educated at the University of Fribourg in Switzerland, and has been a lecturer at Bath since 2000. He has been published in a number of journals, including the International Journal of Theoretical and Applied Finance, the Quarterly Review of Economics and Finance and the Journal of Investment Compliance.