The Loan Size as a Commitment Device

Fahad Khalil and B-M Parigi

Discussion Papers in Economics at the University of Washington from Department of Economics at the University of Washington

Abstract: We model risky lending with costly state verification but without commitment to an audit strategy. The borrower under-reports with a positive probability in the successful state, and the lender audits with a positive probability after a report of failure.

Keywords: INFORMATION; CREDIT; FINANCIAL INSTITUTIONS (search for similar items in EconPapers)
JEL-codes: D82 G20 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1997
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Journal Article: Loan Size as a Commitment Device (1998)
Working Paper: The Loan Size as a Commitment Device (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:washer:97-08

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