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Creditor Contest In A World Without Bankruptcy


  • Dieter Gathge

    (University of Zuerich, Institute for Accounting and Control)


In this article a simple model of creditor behavior is developed to analyze the implications of a first-come, first-served rule in the case of investor bankruptcy. Creditor behavior is assumed to be a monitoring contest. Since the monitoring contest is very costly, interest rates are high. The model provides interesting implications for the design of bankruptcy rules. It also provides a motive for financial intermediation.

Suggested Citation

  • Dieter Gathge, 2009. "Creditor Contest In A World Without Bankruptcy," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 46(3), pages 85-96.
  • Handle: RePEc:blg:reveco:v:46:y:2009:i:3:p:85-96

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    References listed on IDEAS

    1. Birol IBADULA & Cristina VLAD & Petre BREZEANU, 2016. "Taxation Influence On Economic Stability In Romania And European Union," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 11, pages 275-281, July.
    2. Corder, Matthew & Eckloff, Daniel, 2011. "International evidence on inflation expectations during Sustained Off-Target Inflation episodes," Bank of England Quarterly Bulletin, Bank of England, vol. 51(2), pages 111-115.
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    Bankruptcy; Liquidation; Monitoring; Contest;


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