Credit rationing, bankruptcy cost, and the optimal debt contract for small business

Ying Yan

No 9702, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: An examination of whether the costly random verification scheme affects the optimal debt contract for small business. It finds, contrary to Townsend (1979) and Williamson (1986, 1987), that the standard debt contract is the optimal debt contract with the costly random verification scheme.

Keywords: Discrimination in consumer credit; Bankruptcy; Debt; Small business (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (2)

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