The optimal exclusion length of borrowers after default

Andreas Krause

Economics Letters, 2022, vol. 220, issue C

Abstract: We determine the optimal exclusion from borrowing to avoid strategic default. The optimal length is smaller if borrowers are less risky, have higher returns, markets are more competitive, deposit rates are low, and the more patient market participants are.

Keywords: Strategic default; Financial exclusion; Imperfect information; Borrowing (search for similar items in EconPapers)
JEL-codes: C73 D86 G21 G32 G51 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:220:y:2022:i:c:s016517652200355x

DOI: 10.1016/j.econlet.2022.110881

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