Private Renegotiations and Government Interventions in Debt Chains
Abstract/Contents
- Abstract
- We propose a model of strategic debt renegotiation in which businesses are sequentially interconnected through their liabilities. This financing structure, which we refer to as a debt chain, gives rise to externalities, as a lender’s willingness to provide concessions to its privately informed borrower depends on how the lender’s own liabilities are expected to be renegotiated. Our analysis reveals how government interventions that aim to prevent default waves should account for these private renegotiation incentives and their interlinkages. Our results shed light on the effectiveness of subsidies and debt reduction programs following economic shocks such as pandemics or financial crises.
Description
| Type of resource | text |
|---|---|
| Date created | September 1, 2021 |
Creators/Contributors
| Author | Glode, Vincent |
|---|---|
| Author | Opp, Christian C. |
| Organizer of meeting | Begenau, Juliane |
| Organizer of meeting | Hansen, Lars Peter |
| Organizer of meeting | Hebert, Ben |
| Organizer of meeting | Piazzesi, Monika |
Subjects
| Subject | debt renegotiation |
|---|---|
| Subject | credit |
| Subject | bargaining power |
| Subject | default waves |
| Genre | Text |
| Genre | Working paper |
| Genre | Grey literature |
Bibliographic information
Access conditions
- Use and reproduction
- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
- License
- This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).
Preferred citation
- Preferred citation
- Glode, V. and Opp, C. (2022). Private Renegotiations and Government Interventions in Debt Chains. Stanford Digital Repository. Available at https://purl.stanford.edu/hb964yj8109
Collection
SITE Conference 2021
View other items in this collection in SearchWorksContact information
- Contact
- siteworkshop@stanford.edu
Also listed in
Loading usage metrics...