Tech-Driven Intermediation in the Originate-to-Distribute Model

86 Pages Posted: 26 Jan 2024

See all articles by Zhiguo He

Zhiguo He

Stanford University - Knight Management Center

Sheila Jiang

University of Florida - Department of Finance, Insurance and Real Estate

Douglas Xu

University of Florida - Warrington College of Business Administration

Date Written: January 10, 2024

Abstract

This paper develops a general equilibrium model to examine the role of information technology when intermediaries facilitate the origination and distribution of assets given information asymmetry. Information technology measures the informativeness of asset-quality signals received by intermediaries, who purchase assets produced by originators and then resell them to uninformed investors. Allowing intermediaries to operate has a mixed social welfare effect: Uninformed intermediation can be welfare reducing when adverse selection is severe in the economy, while informed intermediation always improves social welfare.

Keywords: Information Technology, Intermediation, Directed Search, Adverse Selection, Originate to Distribute, Monitoring the Monitor

JEL Classification: D52, D82, G21, G23, O33

Suggested Citation

He, Zhiguo and Jiang, Sheila and Xu, Douglas, Tech-Driven Intermediation in the Originate-to-Distribute Model (January 10, 2024). Available at SSRN: https://ssrn.com/abstract=4690984 or http://dx.doi.org/10.2139/ssrn.4690984

Zhiguo He (Contact Author)

Stanford University - Knight Management Center ( email )

655 Knight Way
Stanford, CA 94305-7298
United States

Sheila Jiang

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States

Douglas Xu

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

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