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Quality of Institutions, Credit Markets and Bankruptcy

dc.contributor.authorHainz, Christaen_US
dc.date.accessioned2006-08-01T15:36:39Z
dc.date.available2006-08-01T15:36:39Z
dc.date.issued2005-02-01en_US
dc.identifier.otherRePEc:wdi:papers:2005-745en_US
dc.identifier.urihttps://hdl.handle.net/2027.42/40131en_US
dc.description.abstractThe number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank’s decision to liquidate bad firms has two opposing effects. First, the bank receives a payoff if a firm is liquidated. Second, it loses the rent from incumbent customers that is due to its informational advantage. We show that institutions must improve significantly in order to yield a stable equilibrium in which the optimal number of firms is liquidated. There is also a range where improving institutions may decrease the number of bad firms liquidated.en_US
dc.format.extent120855 bytes
dc.format.extent3151 bytes
dc.format.extent388097 bytes
dc.format.mimetypetext/plain
dc.format.mimetypetext/plain
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen_US
dc.relation.ispartofseries745en_US
dc.subjectCredit Markets, Institutions, Bank Competition, Information Sharing, Bankruptcy, Relationship Banking.en_US
dc.subject.otherG21, G33, K10, D28en_US
dc.titleQuality of Institutions, Credit Markets and Bankruptcyen_US
dc.typeWorking Paperen_US
dc.subject.hlbsecondlevelEconomicsen_US
dc.subject.hlbtoplevelBusinessen_US
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/40131/3/wp745.pdfen_US
dc.owningcollnameWilliam Davidson Institute (WDI) - Working Papers


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