On the Non-Exclusivity of Loan Contracts: An Empirical Investigation

Hans Degryse, Vasso Ioannidou () and Erik von Schedvin ()

No 258, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: A string of theoretical papers shows that the non-exclusivity of credit contracts generates important negative contractual externalities. Employing a unique dataset, we identify how these externalities affect the supply of credit. Using internal information on a creditor’s willingness to lend, we find that a creditor reduces its credit supply when a borrower obtains a loan at another creditor (an “outside loan”). Consistent with the theoretical literature, the effect is more pronounced the larger the outside loans and it is muted if the initial creditor’s existing and future loans retain seniority over the outside loans and are secured with valuable collateral.

Keywords: non-exclusivity; contractual externalities; credit supply; debt seniority (search for similar items in EconPapers)
JEL-codes: G21 G34 L13 L14 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2012-02-01
New Economics Papers: this item is included in nep-ban and nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: On the Non-Exclusivity of Loan Contracts: An Empirical Investigation (2012)
Working Paper: On the Non-Exclusivity of Loan Contracts: An Empirical Investigation (2011)
Working Paper: On the Non-Exclusivity of Loan Contracts: An Empirical Investigation (2011)
Working Paper: On the Non-Exclusivity of Loan Contracts: An Empirical Investigation (2011)
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