Informed Lending And Security Design  

Oleh:

Inderst, Roman ; Mueller, Holger M.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 61 no. 5 (Okt. 2006), page 2137-2162.
Topik: LENDING; studies; investment policy; securities trading; economic models
Fulltext: p 2137.pdf (215.47KB)

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

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Isi artikel

We examine the role of security design when lenders make inefficient accept or reject decisions after screening projects. Lenders may be either too conservative in which case they reject positive NPV projects or too aggresive in which case they accept negative NPV projecs. In the first case, the uniquely optimal security is debt. In the second case, it is levered equity. In equilibrium, profitable projects that are relatively likely to break even are financed with debt, while less profitable projects are financed with equity. Highly profitable projects are financed by uninformed arm's length lenders.

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