Multiple Lenders, Strategic Default, and Covenants

• 成果类型: Article
• 署名作者: Attar, Andrea; Casamatta, Catherine; Chassagnon, Arnold; Decamps, Jean-Paul
• 署名单位: Centre National de la Recherche Scientifique (CNRS); Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics; Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics; Universite de Tours; Paris School of Economics
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20170189
• 发表日期: 2019
• 页码: 98-130
• 关键词: Counterparty risk; capital structure; Control rights; moral hazard; Clearinghouses; liquidity; credit; lines

摘要

We study capital markets in which investors compete by designing financial contracts to control an entrepreneur's ability to side trade and default on multiple loans. We show that covenants may have anticompetitive effects: in particular, they prevent investors from providing additional funds and reduce the entrepreneur's investment capacity. As a result, a large number of inefficient allocations is supported at equilibrium. We propose a subsidy mechanism similar to guarantee funds in financial markets that efficiently controls the entrepreneur's side trading and sustains the competitive allocation as the unique equilibrium one.