Adverse Selection in Financial Markets

In Economics, adverse selection is defined as a market situation where buyers and sellers have different information, so that a participant might participate selectively in trades which benefit them the most, at the expense of the other trader Adverse selection is a problem that appears in financial markets as a consequence of the presence of asymmetric information, which … Continue reading Adverse Selection in Financial Markets

The Monetary Transmission Mechanism

The “Monetary Transmission Mechanism” is the set of operations by which monetary policy decisions affect the aggregate demand, the credit market, interest rates and the economy in general. This mechanism operates through different transmission channels which are grouped into three main categories, depending on the area they affect the most. These are interest rate channels, … Continue reading The Monetary Transmission Mechanism