The commitment problem of secured lending

• 成果类型: Article
• 署名作者: Fabbri, Daniela; Menichini, Anna Maria C.
• 署名单位: City St Georges, University of London; University of Salerno
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.02.009
• 发表日期: 2016
• 页码: 561-584
• 关键词: Collateral; COMMITMENT; Trade credit; Bank financing

摘要

The paper presents a new theory of trade credit in which firms buy inputs on credit from suppliers to restore the benefits of secured bank financing impaired by contract incompleteness. In a setting where investment is endogenous and unobservable to financiers, we show that a bank-secured credit contract is time-inconsistent. Upon being granted credit, the entrepreneur has an incentive to alter the original input combination, jeopardizing the bank's revenues. Anticipating the entrepreneur's opportunism, the bank offers an unsecured credit contract, reducing the surplus from the venture. One way for the entrepreneur to commit to the contract terms is to purchase inputs on credit from the supplier. The supplier observes the input investment and acts as a guarantor that inputs will be purchased as contracted, thus facilitating access to secured bank financing. The commitment role of trade credit still holds in a multi-period extension that investigates the impact of bank relationship lending on secured debt and trade credit. Our model provides novel testable predictions on optimal financial contracts in both one-period and repeated lending relationships. (C) 2016 Published by Elsevier B.V.