The Grain Trade

2012 ◽  
Author(s):  
Peter Temin
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Transaction Costs ◽  
Adverse Selection ◽  
The State ◽  
Grain Trade ◽  
Wheat Market ◽  
The Mediterranean

This chapter explores the Mediterranean wheat market. The Romans made many products, from wines to pottery and glass, but wheat was the most widely traded commodity during those times. Shipped from distant provinces, the grain changed hands many times before it reached Rome. This trade was organized by the state and private merchants who did not have the benefit of modern means of transportation or communication, and merchants faced high transaction costs from several sources. The Roman government cleared the Mediterranean of pirates in 67 BCE, reducing greatly one major source of risk for merchants. However, merchants in Rome still had to rely on potentially corrupt agents operating in faraway provinces for months at a time. This arrangement created adverse selection and moral hazard problems from the asymmetric information available to merchants and their agents.

AGENCY PROBLEM DALAM PENERAPAN PEMBIAYAAN AKAD MUDHARABAH PADA PERBANKAN SYARIAH

ALQALAM ◽  
2016 ◽  
Vol 33 (1) ◽  
pp. 46
Author(s):  
Aswadi Lubis
Keyword(s):  
High Risk ◽  
Asymmetric Information ◽  
Human Resources ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Agency Problem ◽  
Agency Problems ◽  
Islamic Banking ◽  
The Public

The purpose of writing this article is to describe the agency problems that arise in the application of the financing with mudharabah on Islamic banking. In this article the author describes the use of the theory of financing, asymetri information, agency problems inside of financing. The conclusion of this article is that the financing is asymmetric information problems will arise, both adverse selection and moral hazard. The high risk of prospective managers (mudharib) for their moral hazard and lack of readiness of human resources in Islamic banking is among the factors that make the composition of the distribution of funds to the public more in the form of financing. The limitations that can be done to optimize this financing is among other things; owners of capital supervision (monitoring) and the customers themselves place restrictions on its actions (bonding).

Improving Trustworthiness in E-Market Using Attack Resilient Reputation Modeling

2014 ◽  
Vol 10 (3) ◽  
pp. 57-82
Author(s):  
Neeraj Kumar Sharma ◽  
Vibha Gaur ◽  
Punam Bedi
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Reputation Systems ◽  
Trust And Reputation ◽  
Reputation Mechanisms ◽  
Reputation Building ◽  
Building Parameters

Asymmetric information is a major problem in e-commerce transactions as it gives rise to adverse selection and moral hazard problems. Reputation mechanisms provide a solution to this problem by discouraging fraudulent behavior and encouraging honest behavior of participants in the uncertain and un-trusted environment of e-market. This paper discusses trust and reputation relationships, and highlights the importance of key reputation building parameters to enhance trustworthiness of participants. Finally, it proposes reputation metrics that guard reputation systems from various attacks by malicious participants to improve the quality of e-market and presents a working prototype.

Agency, Information, and the Structure of Moral Problems in Business

2006 ◽  
Vol 28 (2) ◽  
pp. 177-195 ◽  
Author(s):  
Bryan W. Husted
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Information Economics ◽  
Principal Agent ◽  
Ethical Problems ◽  
Agent Model ◽  
Moral Problems ◽  
Principal Agent Model

Many ethical problems in business can be characterized as having elements of incomplete and/or asymmetric information. This paper analyzes such problems using information economics and the principal-agent model. It defines the nature of moral problems in business and then applies principal-agent models involving adverse selection and moral hazard to these problems. Possible solutions to conditions of information asymmetry are examined in order to support the development of organizational virtue.

scholarly journals Peran Kelembagaan Perdesaan untuk Keberlanjutan Penerapan SRI di Kabupaten Karawang

2014 ◽  
Vol 14 (2) ◽  
pp. 109-127
Author(s):  
Luh Putu Suciati ◽  
Bambang Juanda ◽  
Akhmad Fauzi ◽  
Ernan Rustiadi
Keyword(s):  
Moral Hazard ◽  
Transaction Costs ◽  
Adverse Selection ◽  
Institutional Economics ◽  
Transaction Cost Economics ◽  
Revenue Sharing ◽  
Principal Agent ◽  
Farm Work ◽  
Logit Regression ◽  
Farmer Groups

AbstractSustainability of System of Rice Intensication (SRI) requires rural institution role. The study was conducted in Karawang and uses institutional economics approach and logit regression. The analysis shows potential problems of SRI related with principal-agent/institutional relation and economics transaction costs. Strengthening the activities within farmer groups will reduce economics transaction costs in beginning of application. Farmer will choose "bagi hasil/revenue sharing" as land management cooperation with moderate risks and transaction costs. Monitoring and incentive mechanism will reduce problems of adverse selection and moral hazard. Some factors which determine the sustainability of SRI are production, principal position, off farm work and ex ante transaction costs.Keywords: Rural Institution, Transaction Cost Economics, System of Rice Intensication AbstrakKeberlanjutan penerapan metode System of Rice Intensication (SRI) membutuhkan peran kelembagaan perdesaan. Studi dilakukan di Kabupaten Karawang dan menggunakan pendekatan kelembagaan ekonomi dan regresi logit. Hasil analisis menunjukkan potensi problem metode SRI terkait hubungan kelembagaan principal-agent dan biaya transaksi ekonomi. Penguatan kinerja kelembagaan perdesaan melalui kegiatan bersama dalam kelompok tani mengurangi biaya transaksi ekonomi pada awal aplikasi SRI. Pilihan kerjasama pengelolaan lahan pola bagi hasil banyak dipilih terkait risiko dan biaya transaksi yang moderat. Potensi masalah berupa moral hazard dan adverse selection dapat dikurangi dengan pemantauan dan mekanisme insentif. Faktor determinan keberlanjutan penerapan metode SRI adalah peningkatan produksi padi, posisi sebagai pemilik lahan, pekerjaan di luar usaha tani, dan biaya transaksi sebelum pelaksanaan.Kata kunci: Kelembagaan Perdesaan, Biaya Transaksi Ekonomi, System of Rice Intensication

scholarly journals Asymmetric Information and Islamic Financial Contracts

2018 ◽  
Vol 11 (1) ◽  
pp. 96 ◽  
Author(s):  
Abdelhafid Benamraoui ◽  
Yousef Alwardat
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Comparative Advantage ◽  
Research Paper ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Financial Contracts ◽  
Net Profit ◽  
Conventional Banks

This research paper aims to examine the relevance of asymmetric information to the two main financial contracts used by Islamic banks or conventional banks with Islamic windows, mudaraba and musharaka. We use theoretical proofs to explain how asymmetric information affects mudaraba and musharaka contract in terms of bank cost and yield and how to account for the adverse selection and moral hazard costs when calculating bank net profit or loss. We also provide suggestions supported by key modern theories including signalling, comparative advantage and incentives to resolve asymmetric information problems in the Islamic financial contracts. The research paper shows that asymmetric information is relevant to both mudaraba and musharaka contracts and directly affects Islamic banks and conventional banks with Islamic windows cost and yield. The paper also reveals that signalling and incentives are effective tools to deal with asymmetric information in Islamic financial contracts. Finally, the paper shows that Islamic finance providers need to opt for more secure financing, particularly with small borrowers.

scholarly journals Informal Finance and Asymmetric Information: A theory Review

2017 ◽  
Vol 4 (2) ◽  
pp. 190 ◽  
Author(s):  
Wei Zhao
Keyword(s):  
Asymmetric Information ◽  
Small Business ◽  
Moral Hazard ◽  
Transaction Cost ◽  
Adverse Selection ◽  
Financial Deepening ◽  
Informal Finance ◽  
Formal Finance ◽  
Theory Review ◽  
Objective Necessity

Based on theories of financial inhibition and Transaction Cost Theories, along with the combination of behavior economics, this paper tries to discuss and analyze the nature of informal finance. In china, it is hard to finance for Mid-small business, informal finance has advantage to deal with the capital gap of Mid-small size business as a supplementary means of formal finance which are hard to overcome the problem of adverse selection and moral hazard induced by asymmetric information. we discussed the foundation for existing of informal finance and objective necessity. Based on perspective of asymmetric information, we tried to answer why informal finance still thrived vibrantly on the process of financial deepening.

scholarly journals The Problem of Unilateralism in Agency Theory: Towards a Bilateral Formulation

2017 ◽  
Vol 27 (2) ◽  
pp. 163-182 ◽  
Author(s):  
Sareh Pouryousefi ◽  
Jeff Frooman
Keyword(s):  
Social Interaction ◽  
Asymmetric Information ◽  
Moral Hazard ◽  
Agency Theory ◽  
Adverse Selection ◽  
Principal Agent ◽  
Ethical Behaviour ◽  
Cautionary Tale ◽  
Economic Interactions ◽  
Normative Argument

ABSTRACT:Some business ethicists view agency theory as a cautionary tale—a proof that it is impossible to carry out successful economic interactions in the absence of ethical behaviour. The cautionary-tale view presents a nuanced normative characterisation of agency, but itsunilateralfocus betrays a limited understanding of the structure of social interaction. This article moves beyond unilateralism by presenting a descriptive and normative argument for abilateralcautionary-tale view. Specifically, we discuss hat swaps and role dualism in asymmetric-information principal-agent relationships and argue that the norm of reciprocity can function as a moral solution to agency risks in adverse-selection and moral-hazard problems. Our bilateral cautionary-tale formulation extends the normative boundaries of agency theory, while leaving the fundamental economic assumptions of agency theory intact.

scholarly journals A Student of Year 12 in Harrow International School Hong Kong

2018 ◽  
Vol 4 (3) ◽  
pp. 260
Author(s):  
Nanqi Zhou
Keyword(s):  
Hong Kong ◽  
Asymmetric Information ◽  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Financial Market ◽  
International School ◽  
Principal Agent ◽  
Principal Agent Problem ◽  
The Government

<p class="BodyA">George Akerlof introduced the idea that due to asymmetric information between the buyer and the seller in the lemons market, the market for second-hand vehicles will eventually go on the wane. Parallel to this argument, this essay discusses the extent of problem caused by information asymmetry in the financial market, with the most prominent issues being adverse selection, moral hazard and principal agent problem. Yet, with more regulation from the government and the market, some of these problems can be ameliorated, thus reducing the role that asymmetric information plays in the financial market.</p>

scholarly journals The Importance of Good Customer Ethics in Improving The Financing Portion of Mudharabah

2016 ◽  
Vol 4 (1) ◽  
pp. 015
Author(s):  
Khotibul Umam
Keyword(s):  
Asymmetric Information ◽  
Business Ethics ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Profit Sharing ◽  
Islamic Banking ◽  
Islamic Bank ◽  
Bank Financing

Mudharabah is a partnership contract (reputation agreement) in which one party (shahibul maal) will give his property to another party (mudharib) as productive business capital  with profit sharing between the owner of the funds/capital based on the agreed ratio in advance. In practice, the application of financing mudharabah is not easy to be implemented in Islamic banking because financing mudharabah will make the asymmetric information between the customer and Islamic banking. Mudharabah client have more information than Islamic banking about all of that business.  Asymmetric information sometimes can make the costumer do the moral hazard and adverse selection acts with the result that Islamic banking didn't take that risk and make the distribution of mudharabah financing portion becomes very small when compared to the total number of Islamic bank financing. Mudharabah Customers must have a good business ethics and always have advanced principle of honesty, trustworthy and transparent in managing shahibul maal funds in orther to they can minimize the risk of financing mudharabah and make Islamic banking be confident to grant the decision of financing mudharabah.

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