Are loans with multiple lenders rescheduled more or less often than single-lender loans? Do multiple lenders react efficiently to new information? Our analysis emphasizes the role of the precision of information: lenders trade-off benefits from immediate foreclosure against expected benefits of waiting for other lenders to act, given the likelihood that the other lenders’ information be more precise. We analyze a Bayesian game where signals distributed to lenders may differ in precision and content. Equilibria display excessive liquidation or excessive rescheduling, depending on the likelihood of information. Outcomes are nevertheless second-best, given the constraint that private information cannot be merged.
Debt rescheduling with multiple lenders : relying on the information of others / P. Garella, C. Fluet. - In: ECONOMICA. - ISSN 0013-0427. - 81:324(2014 Oct), pp. 698-720. [10.1111/ecca.12099]
Debt rescheduling with multiple lenders : relying on the information of others
P. Garella;
2014
Abstract
Are loans with multiple lenders rescheduled more or less often than single-lender loans? Do multiple lenders react efficiently to new information? Our analysis emphasizes the role of the precision of information: lenders trade-off benefits from immediate foreclosure against expected benefits of waiting for other lenders to act, given the likelihood that the other lenders’ information be more precise. We analyze a Bayesian game where signals distributed to lenders may differ in precision and content. Equilibria display excessive liquidation or excessive rescheduling, depending on the likelihood of information. Outcomes are nevertheless second-best, given the constraint that private information cannot be merged.File | Dimensione | Formato | |
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