TY  - JOUR
AB  - Why do lenders shrink back from full risk pricing in certain credit markets, even when a sophisticated system of credit scoring is already in place? Fear of bad publicity is the usual reason cited but this paper offers a complementary explanation which suggests that there may be an underlying financial process driving such behaviour. The key proposition of the paper is that risk pricing can cause adverse selection which has the potential to mitigate any positive benefits such a pricing strategy may bring to the lender. This explanation is developed by introducing risk pricing into the seminal Stiglitz and Weiss model and in so doing offers the first substantial link between the risk assessment and credit rationing literatures.
VL  - 21
IS  - 6
SN  - 1463-578X
DO  - 10.1108/14635780310508621
UR  - https://doi.org/10.1108/14635780310508621
AU  - Pryce Gwilym
PY  - 2003
Y1  - 2003/01/01
TI  - Worst of the good and best of the bad: Adverse selection consequences of risk pricing
T2  - Journal of Property Investment & Finance
PB  - MCB UP Ltd
SP  - 450
EP  - 472
Y2  - 2021/01/26
ER  -