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Quality of Institutions, Credit Markets and Bankruptcy Author info | Abstract | Publisher info | Download info | Related research | Statistics Hainz, Christa
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The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank?s decision to liquidate bad firms has two opposing effects. First, the bank receives a payoff if a firm is liquidated. Second, it loses the rent from incumbent customers that is due to its informational advantage. We show that institutions must improve significantly in order to yield a stable equilibrium in which the optimal number of firms is liquidated. There is also a range where improving institutions may decrease the number of bad firms liquidated. --
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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Kiel 2005 with number
18.
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Date of creation: 2005Date of revision:
Handle: RePEc:zbw:gdec05:3491Contact details of provider: Web page: http://www.wiwi.uni-hannover.de/gif/ael/
For technical questions regarding this item, or to correct its listing, contact: (ZBW - German National Library for Economics).
Keywords: Credit markets ; institutions ; bank competition ; information sharing ; bankruptcy ; relationship banking ; Other versions of this item:
Paper Christa Hainz, 2004.
"Quality of Institutions, Credit Markets and Bankruptcy ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!] Christa Hainz, 2005.
"Quality of Institutions, Credit Markets and Bankruptcy ,"
William Davidson Institute Working Papers Series
wp745, William Davidson Institute at the University of Michigan Stephen M. Ross Business School.
[Downloadable!] Hainz, Christa, 2004.
"Quality of Institutions, Credit Markets and Bankruptcy ,"
Discussion Papers in Economics
388, University of Munich, Department of Economics.
[Downloadable!] Find related papers by JEL classification: G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law) G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Philippe Aghion, Patrick Bolton & Steven Fries, 1999.
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CSEF Working Papers
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CEPR Discussion Papers
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Other versions:
Magda Bianco & Tullio Jappelli & Marco Pagano, 2001.
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Padilla, A.J. & Pagano, M., 1994.
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Policy Research Working Paper Series
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Claessens, Stijn & Klapper, Leora F., 2002.
"Bankruptcy around the World: Explanations of its Relative Use ,"
CEI Working Paper Series
2002-17, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
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American Law and Economics Review ,
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[Downloadable!] (restricted) Pagano, Marco & Jappelli, Tullio, 1993.
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Other versions: Monika Schnitzer, 2003.
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Perspektiven der Wirtschaftspolitik ,
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Giovanni Dell'Ariccia & Ezra Friedman & Robert Marquez, 1999.
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RAND Journal of Economics ,
The RAND Corporation, vol. 30(3), pages 515-534, Autumn.
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Mitchell, Janet, 2001.
"Bad Debts and the Cleaning of Banks' Balance Sheets: An Application to Transition Economies ,"
Journal of Financial Intermediation ,
Elsevier, vol. 10(1), pages 1-27, January.
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Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998.
"Law and Finance ,"
Journal of Political Economy ,
University of Chicago Press, vol. 106(6), pages 1113-1155, December.
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Other versions: Jan Bouckaert & Hans Degryse, 2002.
"Entry and Strategic Information Display in Credit Markets ,"
CSEF Working Papers
79, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
[Downloadable!]
Other versions: Erik BERGLÖF & Gérard ROLAND & Ernst-Ludwig VON THADDEN, 2000.
"An Incomplete Contracts Approach to Corporate Bankruptcy ,"
Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP)
00.12, Université de Lausanne, Faculté des HEC, DEEP, revised Apr 2002.
[Downloadable!]
Jappelli, Tullio & Pagano, Marco, 2002.
"Information sharing, lending and defaults: Cross-country evidence ,"
Journal of Banking & Finance ,
Elsevier, vol. 26(10), pages 2017-2045, October.
[Downloadable!] (restricted)
Other versions:
Jappelli, Tullio & Pagano, Marco, 1999.
"Information Sharing, Lending and Defaults: Cross-Country Evidence ,"
CEPR Discussion Papers
2184, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Tullio Jappelli & Marco Pagano, 1999.
"Information Sharing, Lending and Defaults: Cross-Country Evidence ,"
CSEF Working Papers
22, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
[Downloadable!] Perotti, Enrico C., 1993.
"Bank lending in transition economies ,"
Journal of Banking & Finance ,
Elsevier, vol. 17(5), pages 1021-1032, September.
[Downloadable!] (restricted)
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Zakolyukina Anastasia, 2006.
"Bankrtuptcy in Russia: External Management Performance ,"
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