Exploiting the analogy with the public provision of a public good, this paper studies debt restructuring with an arbitrary number of creditors using mechanism design. Creditors differ in the value they expect to receive in bankruptcy, and this value is private information. As with public goods, too little debt forgiveness is graned in equilibrium relative to the first best
Debt restructuring with multiple creditors and the role of exchange offers / E. Detragiache, P.G. Garella. - In: JOURNAL OF FINANCIAL INTERMEDIATION. - ISSN 1042-9573. - 5:3(1996 Jul), pp. 305-336.
Debt restructuring with multiple creditors and the role of exchange offers
P.G. GarellaUltimo
1996
Abstract
Exploiting the analogy with the public provision of a public good, this paper studies debt restructuring with an arbitrary number of creditors using mechanism design. Creditors differ in the value they expect to receive in bankruptcy, and this value is private information. As with public goods, too little debt forgiveness is graned in equilibrium relative to the first best
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