Private Renegotiations and Government Interventions in Credit Chains

• 成果类型: Article
• 署名作者: Glode, Vincent; Opp, Christian C.
• 署名单位: University of Pennsylvania; University of Rochester; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhad045
• 发表日期: 2023
• 页码: 4502
• 关键词: limited-liability; capital structure; debt; RISK; INFORMATION; default; DESIGN; COSTS; determinants; INVESTMENT

摘要

We propose a model of strategic renegotiation in which businesses are sequentially interconnected through their liabilities. This financing structure, which we refer to as a credit chain, gives rise to externalities, as each lender's willingness to provide concessions to its borrower depends on how this lender's own liabilities are expected to be renegotiated. We highlight how government interventions aimed at preventing default waves should account for private renegotiation incentives and interlinkages. In particular, we contrast the consequences of targeted subsidy and debt reduction programs following economic shocks, such as pandemics and financial crises.