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Optimal Deterministic Debt Contracts Author info | Abstract | Publisher info | Download info | Related research | Statistics Karel Janda () (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic , University of Economics, Department of Banking and Insurance, Prague, Czech Republic )
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This paper extends the costly enforcement model of optimal financing to the case of investment projects financed by several lenders. We consider the asymmetric situation when only one lender is a big strategic investor. All other lender are small passive investors. We first provide the sufficient and necessary condition for renegotiation proofness. Then we show that the optima verification is deterministic. We also discuss the conditions under which the optimal contract is a debt contract.
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Paper provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its series Working Papers IES with number
2006/25.
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Length: 25 pages
Date of creation: Oct 2006Date of revision:
Oct 2006Handle: RePEc:fau:wpaper:wp2006_25Contact details of provider: Postal: Opletalova 26, CZ-110 00 Prague Phone: +420 2 222112330 Fax: +420 2 22112304 Email: Web page: http://ies.fsv.cuni.cz/ More information through EDIRC
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Keywords: Costly State Verification ; Multiple Lenders ; Debt ; Other versions of this item:
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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Stefan Krasa & Anne P. Villamil, 2000.
"Optimal Contracts when Enforcement Is a Decision Variable ,"
Econometrica ,
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Petr Kadeřábek, 2006.
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Jan Ámos Víšek, 2007.
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František Turnovec, 2006.
"Publication Portfolio of the Czech Economists and Problems of Rankings ,"
Working Papers IES
2006/30, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2006.
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2006/29, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2006.
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2007/07, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2007.
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2007/20, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2007.
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Adam Geršl, 2007.
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2007/08, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2007.
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