01918cas a2200253 a 4500 AALejournalIMF007351 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451922776 1018-5941 BD-DhAAL BD-DhAAL Roldos, Jorge. The Role of Credit Markets in a Transition Economy with Incomplete Public Information / Jorge Roldos, Kenneth Kletzer. Washington, D.C. : International Monetary Fund, 1996. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In this paper we explore some of the informational problems that constrain the development of credit markets in transition economies. We characterize investment patterns under uncertainty and high costs of entry, when agents learn about the ultimate value of enterprises through production in a Bayesian way. Inefficiencies due to the lack of public information reduce the average return to capital. Under asymmetric information, credit would go to activities that can provide enough co-finance. Credit markets may fail to develop for a while if there is not enough individual wealth to complement credit. Once they operate, credit markets may magnify distortions in equity markets, such as those due to spontaneous privatization. An argument for the sequencing of capital market liberalization is provided. Mode of access: Internet Kletzer, Kenneth. IMF Working Papers; Working Paper ; No. 1996/018 Full text available on IMF http://elibrary.imf.org/view/journals/001/1996/018/001.1996.issue-018-en.xml IMF e-Library