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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27299
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| Title: | Exclusive Contracts and the Institution of Bankruptcy |
| Authors: | Bisin, Alberto
Rampini, Adriano A. |
| Keywords: | Bankruptcy
non-exclusive contracts |
| Issue Date: | Feb-2004 |
| Series/Report no.: | S-MF-04-03 |
| Abstract: | This paper studies the institution of bankruptcy when exclusive
contracts cannot be enforced ex ante, e.g., a bank cannot monitor
whether the borrower enters into contracts with other creditors. The
institution of bankruptcy enables the bank to enforce its claim to any
funds that the borrower has above a fixed “bankruptcy
protection” level. Bankruptcy improves on non-exclusive
contractual relationships but is not a perfect substitute for
exclusivity ex ante. We characterize the effect of bankruptcy provisions
on the equilibrium contracts which borrowers use to raise financing. |
| URI: | http://hdl.handle.net/2451/27299 |
| Appears in Collections: | Macro Finance
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