The Loan Size as a Commitment Device
AbstractWe model risky lending with costly state verification but without commitment to an audit strategy. The borrower under-reports with a positive probability in the successful state, and the lender audits with a positive probability after a report of failure.
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Bibliographic InfoPaper provided by Department of Economics at the University of Washington in its series Discussion Papers in Economics at the University of Washington with number 97-08.
Length: 21 pages
Date of creation: 1997
Date of revision:
INFORMATION ; CREDIT ; FINANCIAL INSTITUTIONS;
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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