Loan size as a commitment device

• 成果类型: Article
• 署名作者: Khalil, F; Parigi, BM
• 署名单位: University of Washington; University of Washington Seattle; Universita Ca Foscari Venezia
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.2307/2527234
• 发表日期: 1998
• 页码: 135-150
• 关键词: sovereign debt; verification; RENEGOTIATION; equilibrium; CONTRACTS; MODEL

摘要

We 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. Under lack of commitment to audit probabilities, an increase in loan size convinces the borrower that the lender has a high stake in an audit. This reduces the probability of under-reporting and leads to overinvestment relative to the commitment case. However, there is under-investment relative to the level under full information.