Price discrimination in the lending market: informational reasons

In this article, the author explores the problem of price discrimination in the lending market from the point of view of its informational causes. The author analyzes the models of price discrimination in general, determining its connection with the incompleteness of information among market participants, and examines them in relation to the credit market. In particular, the author identifies the following reasons: the presence of monopoly power based on the advantage of awareness about the terms of lending; the lack of information from the lender and the level of solvency of the borrower; incomplete information from the borrower about the cost of the loan from other lenders. The author believes that digitalization of the financial sector and increasing its information transparency can increase the level of discrimination due to the fact that investments in fintech and the involvement of potential customers in financial ecosystems strengthen the bank’s monopoly power over borrowers, which has an informational nature.