The Influence Of Information Asymmetry Between Banks And Firms On The Labor Unemployment

Economy development,full employment,price stability and balance of payments are the four goals of judging a country's economic performance.However,high unemployment is not only a economic problem faced by many developing country,but the priority of some developed country to solve,especially in the context of financial crisis,which had given many country's economy a heavy shock and had given rise the problem of high unemployment in those country.Thus,majoring the impact of asymmetric-information between banks and firms on labor unemployment rate from the perspective of relationship between bank and firm has great theoretical and practical significance.This paper analysis the difference of long-term labor unemployment rate between symmetric-information market and asymmetric-information market,based on a “search-matching model”,in which the output among firms are heterogeneous.The paper proves that the asymmetry of information between firms and banks increases the costs of lending and borrowing,thus aggregating the labor unemployment rate in long run.Further,this paper analyzes the impact of improving measures to asymmetric-information between banks and firms on labor unemployment rate.The result shows that among those measures,the proclaim of firms have not thing to do with the issue of asymmetric-information,and with no help of decreasing labor unemployment rate.Although part of firms successfully solving the problem of heavy loan cost caused by asymmetric-information between banks and firms by setting up reputation,those firms with no fame still face the problem of asymmetric-information.Thus,even if the credit market and labor market are in equilibrium,the labor unemployment rate will not decrease.While the governmental transfer paying efficiently ease the burden of loan faced by firms with no fame,caused by asymmetric-information,and thus decreasing the labor unemployment rate.