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Cited by 412Economic theories and modelsFinancial Markets and Investment StrategiesBanking stability, regulation, efficiency

The market for information and the origin of financial intermediation

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Allen, Franklin·1990·Journal of Financial Intermediation
DOI 10.1016/1042-9573(90)90006-2
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Abstract

When information is sold, there is often a reliability problem since anyone can claim to have superior knowledge. Optimal strategies which allow a seller to establish that he is informed are considered in a standard one-period, two-asset model. When risk aversion is unobservable, an information market is viable and both the seller and the buyers are better off participating. However, the seller cannot obtain the full value of his information because of the reliability problem. This provides an opportunity for intermediation since an intermediary may be able to capture some of the remaining value.

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Crossref · 10.1016/1042-9573(90)90006-2

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  • Financial intermediaries may reduce the costs of acquiring and processing information and improve resource allocation.

    “Financial intermediaries may reduce the costs of acquiring and processing information and improve resource allocation”

    From Finance, Growth, and Inequality (2021) · cites this paper as Allen 1990

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Authors
Allen, F.
Affiliations
University of Pennsylvania (US)
Corresponding author
Allen, Franklin
ORCID
Allen, Franklin
Venue
Journal of Financial Intermediation
Publisher
Elsevier BV
Published
1990-03
Volume
1
Issue
1
Pages
3-30
ISSN
1042-9573 (ISSN-L)
DOI
10.1016/1042-9573(90)90006-2
OpenAlex
W1981315212
Cited by
412
References
1
Citations by year
2026: 5 · 2025: 9 · 2024: 8 · 2023: 11 · 2022: 11 · 2021: 13 · 2020: 7 · 2019: 14 · 2018: 12 · 2017: 15 · 2016: 17 · 2015: 27 · 2014: 16 · 2013: 23 · 2012: 28
FWCI
19.29
Type
journal article
Language
en
Open access
Licence
Locations
  • Journal of Financial Intermediation (publishedVersion, cc-by-nc-nd)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
National Science Foundation (SES-8813719, SES-8420171)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
  • Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
Keywords
information market, financial intermediation, information reliability, risk aversion, value of information

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