Joint Liability Borrowing and Suicide

Joe Chen, Yun Jeong Choi and Yasuyuki Sawada ()
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Joe Chen: Faculty of Economics, University of Tokyo
Yun Jeong Choi: Faculty of Economics, University of Tokyo

No CIRJE-F-534, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper shows that joint liability borrowing may put too much pressure on the borrower, mainly through the stigma in case of repayment failure, and leads to a vexing outcome|the suicide of the borrower. We provide a model of joint liability borrowing which facilitates credit market transaction ex ante but may induce suicides ex post in the bad state. We introduce some supportive evidence from a suicide survey in Japan.

New Economics Papers: this item is included in nep-mfd
Date: Written 2007-12
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