Information Technology and Financial Services Competition

36 Pages Posted: 11 Jan 2002

See all articles by Robert Marquez

Robert Marquez

University of California, Davis

Robert B. H. Hauswald

American University - Department of Finance and Real Estate

Multiple version iconThere are 2 versions of this paper

Abstract

This paper analyzes the impact of two dimensions of technological progress on competition in financial services. On the one hand, better information technology may result in improved information processing; on the other, it might also lead to low cost or even free access to information through, for example, informational spillovers. In the context of credit screening, we show that better access to information decreases interest rates and the returns from screening. However, an improved ability to process information increases interest rates and bank profits. Hence, predictions regarding the pricing of financial claims hinge on the overall effect ascribed to the technological progress. Our results generalize to other financial markets where informational asymmetries are prime determinants of profitability, such as insurance and securities markets.

JEL Classification: D43, D44, G21, L11, O33

Suggested Citation

Marquez, Robert S. and Hauswald, Robert B.H., Information Technology and Financial Services Competition. Available at SSRN: https://ssrn.com/abstract=296179 or http://dx.doi.org/10.2139/ssrn.296179

Robert S. Marquez (Contact Author)

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Robert B.H. Hauswald

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-1996 (Phone)
202-885-1946 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
623
Abstract Views
3,116
rank
52,192
PlumX Metrics