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Incomplete financial participation: exclusive markets, investment clubs and credit risk

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  • Pérez Fernández, Víctor
  • Torres-Martínez, Juan Pablo

Abstract

We develop a general equilibrium model with incomplete financial participation and price dependent financial constraints. In our model, equilibrium exists even when agents do not have access to all financial contracts. For instance, exclusive credit lines and investment clubs are compatible with our framework. We also extend the literature of incomplete financial participation to include debts backed by price dependent collateral, and non-ordered preferences negatively affected by the amount of default.

Suggested Citation

  • Pérez Fernández, Víctor & Torres-Martínez, Juan Pablo, 2012. "Incomplete financial participation: exclusive markets, investment clubs and credit risk," MPRA Paper 36624, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36624
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    References listed on IDEAS

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    5. Bernard Cornet & Ramu Gopalan, 2010. "Arbitrage and equilibrium with portfolio constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 45(1), pages 227-252, October.
    6. Cass, David & Siconolfi, Paolo & Villanacci, Antonio, 2001. "Generic regularity of competitive equilibria with restricted participation," Journal of Mathematical Economics, Elsevier, vol. 36(1), pages 61-76, September.
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    8. Bernard Cornet & Abhishek Ranjan, 2013. "Existence of equilibria via quasi-equilibria," Documents de travail du Centre d'Economie de la Sorbonne 13020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    9. Carosi, Laura & Gori, Michele & Villanacci, Antonio, 2009. "Endogenous restricted participation in general financial equilibrium," Journal of Mathematical Economics, Elsevier, vol. 45(12), pages 787-806, December.
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    More about this item

    Keywords

    Incomplete nancial participation; Exclusive credit lines; Collateralized loans;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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