Sengupta, Rajdeep - Federal Reserve Bank of St. Louis - 2006
(see references in Boot, 2004). According to this view, banks gain "knowledge" about payo�-
relevant borrower attributes … previous lending relationships), while a borrower�s observable
risk is common knowledge. Therefore, by analyzing di�erences in … knowledge. If one denotes a bank�s pro�ts
from loan (R;C) to borrower k by k(R;C) (R;C; k), and Bank j�s o�er to borrower k …