Presidential Address , Committing to Commit : Short - Term Debt When Enforcement is Costly  

Oleh:

Diamond, Douglas W.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 59 no. 4 (Aug. 2004), page 1447-1480.
Topik: DEBT; contract law; debt management; enforcement; mathematical models; studies; capital markets
Fulltext: p 1447.pdf (205.79KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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In legal systems with expensive or ineffective contract enforcement, it is difficult to induce lenders to enforce debt contracts. If lenders do not enforce, borrowers will have incentives to misbehave. Lenders have incentives to enforce given bad news when debt is short - term and subject to runs caused by externalities across lenders. Lenders will not undo these externalities by negotiation. The required number of lenders increases with enforcement costs. A very high enforcement cost can exceed the ex ante incentive benefit of enforcement. Removing lender's right to immediately enforce their debt with a "bail - in " can improve the ex ante incentives of borrowers.

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