Contents -- I. Introduction -- II. The Model -- III. Model Analysis -- A. Full Information -- B. Equilibria with Partial Information and Two Bank Types -- Pooling -- Separating -- A parameterized example -- C. Separating Equilibrium with Partial Information and a Continuum of Bank Types -- IV. Extensions -- A. Investment in Loan Technology -- B. Pervasive Moral Hazard and Low-Credit Outcomes -- V. Summary and Conclusions -- References -- Tables -- 1. Expected Payoffs in Different States -- 2. Investment Decision Starting From and Ending at Pooling Equilibria -- 3. Investment Decision Starting From and Ending at Separating Equilibria -- Figures -- 1. Change in the ratio of credit to GDP, 2003-2007 -- 2. The Value Function for Different Types: Separating Equilibrium -- 3. Credit Volumes and Bank Characteristics for a Continuum of Types -- 4. Separating Equilibrium with Low Credit Volume -- 5. Pooling Equilibrium with Low Credit Volume -- Appendix -- I: Expected Loan Losses in a Pooling Equilibrium -- II: Regularity Conditions on the Objective Function with a Continuum of Bank Types.