Debt Rescheduling with Multiple Lenders: Relying on the Information of Others

Claude Fluet and Paolo Garella

Economica, 2014, vol. 81, issue 324, 698-720

Abstract: type="main" xml:id="ecca12099-abs-0001" xml:lang="en">

Are multiple-lender loans rescheduled more or less often than single-lender loans? Do multiple lenders react efficiently to new information? Our analysis emphasizes the role of the precision of information: lenders trade off benefits from immediate foreclosure against expected benefits of waiting for other lenders to act, given the likelihood that other lenders’ information is more precise. We analyse a Bayesian game where signals distributed to lenders may differ in precision and content. Equilibria display excessive liquidation or excessive rescheduling, depending on the likelihood of information. Outcomes are nevertheless second-best, given the constraint that private information cannot be merged.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1111/ecca.2014.81.issue-324 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Debt Rescheduling with Multiple Lenders: Relying on the Information of Others (2013)
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:bla:econom:v:81:y:2014:i:324:p:698-720

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0013-0427

Access Statistics for this article

Economica is currently edited by Frank Cowell, Tore Ellingsen and Alan Manning

More articles in Economica from London School of Economics and Political Science Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().