Passive Creditors

Konstantin Sonin and Koen Schoors

No 4821, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Creditors are often passive because they are reluctant to show bad debts on their own balance sheets. We propose a simple general equilibrium model to study the externality effect of creditor passivity. The model yields rich insights into the phenomenon of creditor passivity, both in transition and developed market economies. Policy implications are deduced. The model also explains in what respect banks differ from enterprises and what this implies for policy. Commonly observed phenomena in the banking sector, such as deposit insurance, lender of last resort facilities, government coordination to work out bad loans and special bank closure provisions, are interpreted in our framework.

Keywords: Bankruptcy; Bad loans; Arrears; Bank closure; creditor passivity (search for similar items in EconPapers)
JEL-codes: G21 G28 G33 P50 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-fin and nep-fmk
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP4821 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Passive Creditors (2005)
Working Paper: Passive Creditors (2005)
Working Paper: Passive Creditors (2005)
Working Paper: Passive Creditors (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4821

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP4821

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().