From Search to Match: When Loan Contracts Are Too Long
Christophe Chamley
(1, 2, 3)
,
Céline Rochon
(4)
Christophe Chamley
- Fonction : Auteur
- PersonId : 1373011
Résumé
A model of lending is presented where loans are established in matches between banks (lenders) and entrepreneurs (borrowers) who meet in a search process. Projects turn out randomly a quick payoff or a long-term payoff that requires a rollover of the loan. The model generates, under proper parameter conditions, two steady states without or with rollover, and rollover is socially inefficient. Under imperfect information, the standard debt contract is privately efficient. However, it extends the domains of equilibria with socially inefficient rollover. The global dynamics displays a continuum of equilibrium paths that each exhibits sudden discontinuities--crises--in which the mass of outstanding loans is reduced by a quantum amount of terminations. Crises have a cleansing effect.
Domaines
Economies et financesFormat du dépôt | Notice |
---|---|
Type de dépôt | Article dans une revue |
Titre |
en
From Search to Match: When Loan Contracts Are Too Long
|
Résumé |
en
A model of lending is presented where loans are established in matches between banks (lenders) and entrepreneurs (borrowers) who meet in a search process. Projects turn out randomly a quick payoff or a long-term payoff that requires a rollover of the loan. The model generates, under proper parameter conditions, two steady states without or with rollover, and rollover is socially inefficient. Under imperfect information, the standard debt contract is privately efficient. However, it extends the domains of equilibria with socially inefficient rollover. The global dynamics displays a continuum of equilibrium paths that each exhibits sudden discontinuities--crises--in which the mass of outstanding loans is reduced by a quantum amount of terminations. Crises have a cleansing effect.
|
Auteur(s) |
Christophe Chamley
1, 2, 3
, Céline Rochon
4
1
PSE -
Paris-Jourdan Sciences Economiques
( 139754 )
- 48 boulevard Jourdan 75014 Paris
- France
2
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
3
Department of Economics
( 164571 )
- 270 Bay State Road, Boston, MA 02215
- France
4
Saïd Business School
( 38218 )
- Park End Street Oxford OX1 1HP UK
- Royaume-Uni
|
Comité de lecture |
Oui
|
Vulgarisation |
Non
|
Langue du document |
Anglais
|
Nom de la revue |
|
Audience |
Non spécifiée
|
Date de publication |
2011-10
|
Volume |
43
|
Page/Identifiant |
385-411
|
Numéro |
s2
|
Public visé |
Scientifique
|
Sous-type de document pour les Articles |
Research article
|
Version du document |
version éditeur
|
Mots-clés (JEL) |
|
Domaine(s) |
|
Voir aussi |
|
Indexation contrôlée |
|
Mots-clés |
en
Search, Debt contract, Asymmetric information, Debt overhang, Strategic complementarity, Multiple equilibria
|
DOI | 10.1111/j.1538-4616.2011.00442.x |
ProdINRA | 316649 |
UT key WOS | 000295209200008 |
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