Entrepreneurial risk choice and credit market equilibria
Kerstin Gerling,
Michal Kowalik and
Heiner Schumacher
No RWP 10-13, Research Working Paper from Federal Reserve Bank of Kansas City
Abstract:
We analyze under what condiitons credit markets are efficient in providing loans to entrepreneurs who can start a new project after previous failure. An entrepreneur of uncertain talent chooses the riskiness of her project. If banks cannot perfectly observe the risk of previous projects, two equilibria may coexist: (1) an inefficient equilibrium in which the entrepreneur undertakes a low-risk project and has no access to finance after failure; and (2) a more efficient equilibrium in which the entrepreneur undertakes high-risk projects and gets financed even after an endogenously determined number of failures.
Date: 2010
New Economics Papers: this item is included in nep-ban, nep-ent and nep-ppm
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.kansascityfed.org/documents/5306/pdf-rwp10-13.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden
Related works:
Journal Article: Entrepreneurial Risk Choice and Credit Market Equilibria (2015)
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:fip:fedkrw:rwp10-13
Ordering information: This working paper can be ordered from
research.library@kc.frb.org
Access Statistics for this paper
More papers in Research Working Paper from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by Zach Kastens (zachary.kastens@kc.frb.org).