Asymmetric Information, Repeated Lending, and Capital Structure

Robert Moore

Journal of Money, Credit and Banking, 1993, vol. 25, issue 3, 393-409

Abstract: This paper develops a model of capital structure in a three period agency framework. Borrowers retain earnings to reduce their loan needs, which reduces their probability of default, which allows them to obtain more favorable credit terms. The model is capable of generating persistence of real shocks through financial market effects. Copyright 1993 by Ohio State University Press.

Date: 1993
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Working Paper: Asymmetric information, repeated lending, and capital structure (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:25:y:1993:i:3:p:393-409

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