Department Chair

Frederick Floss

Date of Award


Access Control

Open Access

Degree Name

Applied Economics, M.A.


Economics and Finance Department


Xingwang Qian

Department Home page

First Reader

Xingwang Qian

Second Reader

Frederick Floss

Third Reader

Theodore Byrley


This paper will demonstrate the impact information asymmetry has on risk management. There is a noticeable impact within the context of consumer credit risk. If a firm is able to recognize this, they can make improved credit decisions that will reduce the consequences. The theoretical impact will be presented while depicting areas of risk management that are susceptible to information asymmetry. We find a direct impact on the development of scoring models, credit policies, and origination volume. These results hold for banks with portfolios consisting of consumer credit products and small business loans. Once known, banks can better tailor their credit policies and underwriting guidelines to reduce the impact. This will provide the blueprints for empirical research into the fiscal consequences, particularly concerning loss provisioning and the charge-off of consumer loans.