| This dissertation consists of three main chapters. The first chapter examines the impact of the quality of information that lenders gather about potential borrowers on interest rates. Banks observe private signals and price to borrowers according to a previously announced pricing policy. An equilibrium is found in price policy functions.;This chapter shows that efficiency can be achieved more easily in markets where different lenders specialize in specific types of borrowers with whom they have a considerable informational advantage. On the other hand, more symmetric markets allow for higher profits for the lender with an informational disadvantage.;The second chapter analyzes both endogenous bank preference formation and lender switching problems in the context of an optimal stopping problem. The model is developed around a group of safe and risky borrowers that search for a lender to finance a particular project. Depending on the rentability of the projects and the differences in projects' risk, borrowers select a bank. Low quality signals generate pooling equilibria where either low risk projects subsidize high profits of risky projects, or only risky projects are funded in early periods. High quality signals on the other hand generate more efficient markets.;The third chapter's main goal is to analyze analysts' coverage of stocks. Here an empirical study estimates the relationship between coverage and the informational environment of a firm. Coverage seems to decrease on average with higher errors in estimation. The data also shows that physically large firms experience a resistance of their coverage to get reduced. Higher past revisions also decrease coverage showing a real cost of uncertainty. Finally, evidence suggests that firms with higher market value have lower probabilities to have their coverage increased. |
