Optimal Dynamic Lending Contracts with Imperfect Enforceability

Rui Albuquerque () and Hugo A. Hopenhayn

RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: In this paper we have developed a general model of borrowing constraints based on the idea of limited enforcement. I our model, borrowing constraints arise as part of the optimal borrowing and lending contract. Our model extends previous theories of borrowing and lending , such as Hart and Moore (1994) allowing for uncertainty and dynamic effects of the resulting credit constraints.

Keywords: BANKING; ENTERPRISES; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: G21 G24 (search for similar items in EconPapers)
Date: 1997
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Persistent link: http://EconPapers.repec.org/RePEc:roc:rocher:439

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