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This paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders. It presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary. Diversification within an intermediary serves to reduce these costs, even in a risk neutral economy. The paper presents some more general analysis of the effect of diversification on resolving incentive problems. In the environment assumed in the model, debt contracts with costly bankruptcy are shown to be optimal. The analysis has implications for the portfolio structure and capital structure of intermediaries.

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Q: What is delegated monitoring?
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What is the meaning of delegated monitoring?

An economic agent appointed to act on behalf of smaller agents in collecting information and/or investing funds.

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How do you use delegated power in a sentence?

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Why are delegated powers called delegated powers?

They are called so because they are power specifically delegated to a certain level of government's jurisdiction.

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Where are delegated powers are found?

Delegated powers are distributed authority in a federal system of government, so any federal system would have delegated powers.

Delegated powers in a sentence?

The people within the colonies were tired of the delegated powers being placed on them by the British Parliament. (This is an example of the term delegated powers in a sentence.)

Who has delegated powers?

A delegated power is one that is reserved for the federal government, so obviously the national government has delegated powers.

Is encouraging trade one of the delegated powers?

Trade is a delegated power to the US Congress.

Explain Authority can be delegated but accountability cannot be delegated?

please explain authority in detail

Would impeachment of the president be a delegated power?

No, it's an expressed power of Congress and could not be delegated.

What gives the president his delegated powers?

The Constitution gives the President of the United States his delegated powers.