Private Renegotiations and Government Interventions in Credit Chains.

Autor:	Glode, Vincent, Opp, Christian C
Předmět:	RENEGOTIATION COMMERCIAL credit EXTERNALITIES BUSINESS finance GOVERNMENT regulation ECONOMIC shock DEBT policy
Zdroj:	Review of Financial Studies; Nov2023, Vol. 36 Issue 11, p4502-4545, 44p
Abstrakt:	We propose a model of strategic renegotiation in which businesses are sequentially interconnected through their liabilities. This financing structure, which we refer to as a credit chain, gives rise to externalities, as each lender's willingness to provide concessions to its borrower depends on how this lender's own liabilities are expected to be renegotiated. We highlight how government interventions aimed at preventing default waves should account for private renegotiation incentives and interlinkages. In particular, we contrast the consequences of targeted subsidy and debt reduction programs following economic shocks, such as pandemics and financial crises. [ABSTRACT FROM AUTHOR]
Databáze:	Complementary Index
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