Asymmetric information refers to that uncertainty which arises as a result of co-ordination problems between two agents. This has a limited applicability in the understanding of how businessmen attempt to protect themselves against the possible fluctuation in macro-economic variables and from a...

Banks advance loans in the absence of precise knowledge in relation to the outcome of borrowers' projects. Consequently, uncertainty in relation to loan repayment emerges. Thus, banks introduce the 'credit standard' as insurance against loans, so that should borrowers' projects fail, borrowers...