Tech-Driven Intermediation in the Originate-to-Distribute Model
86 Pages Posted: 26 Jan 2024
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
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