Crédit, sanctions judiciaires et sélection d'entreprises

Régis Blazy

Revue d'économie politique, 2002, vol. 112, issue 1, 77-102

Abstract: We study conditions under which legal sanctions may lead to an efficient selection of heterogeneous investment projects. We consider a standard debt contract between a bank and a small firm (either profitable or not) : if financial distress occurs, an arbitration between private agreement and costly bankruptcy takes place. Before the debt repayment time, firms arbitrate between continuation and voluntary liquidation. The legislator computes a level of legal sanctions that incites good firms to continue and bad ones to liquidate: it exists provided that bankruptcy costs are not too high. Now, because legal sanctions are bound to the level of the assets shortage, the legislator?s action only leads to a second best optimum. Nevertheless, simulations show that even a moderate level of legal sanctions is sufficient for discriminating heterogeneous firms. Classification JEL : G33, D82, D21

Keywords: bankruptcy; debt; bargaining; legal sanctions; law and economics; efficiency; incomplete information; entreprise (search for similar items in EconPapers)
JEL-codes: D21 D82 G33 (search for similar items in EconPapers)
Date: 2002
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