Quality of Institutions, Credit Markets and Bankruptcy
Quality of Institutions, Credit Markets and Bankruptcy
The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank's decision to liquidate bad firms has two opposing effects. First, the bank receives a payoff if a firm is liquidated. Second, it loses the rent from incumbent customers that is due to its informational advantage. We show that institutions must improve significantly in order to yield a stable equilibrium in which the optimal number of firms is liquidated. There is also a range where improving institutions may decrease the number of bad firms liquidated.
Firmenkundengeschäft, Konkurs, 330, Economics, D28, Information Sharing, Credit markets, Liquidation, Institutions, credit markets, institutions, bank competition, information sharing, bankruptcy, relationship banking, Business, institutions, G33, Bank Competition, Bankgeschäft, Credit markets, institutions, bank competition, information sharing, bankruptcy, relationship banking, Bankruptcy, ddc:330, Institutionelle Infrastruktur, Credit markets,institutions,bank competition,information sharing,bankruptcy,relationship banking, K10, Relationship Banking, Credit markets; institutions; bank competition; information sharing; bankruptcy; relationship banking, bank competition, 300, credit markets, Credit Markets, D82, Asymmetrische Information, bankruptcy, information sharing, relationship banking, G21, jel: jel:D82, jel: jel:G21, jel: jel:G33, jel: jel:K10
Firmenkundengeschäft, Konkurs, 330, Economics, D28, Information Sharing, Credit markets, Liquidation, Institutions, credit markets, institutions, bank competition, information sharing, bankruptcy, relationship banking, Business, institutions, G33, Bank Competition, Bankgeschäft, Credit markets, institutions, bank competition, information sharing, bankruptcy, relationship banking, Bankruptcy, ddc:330, Institutionelle Infrastruktur, Credit markets,institutions,bank competition,information sharing,bankruptcy,relationship banking, K10, Relationship Banking, Credit markets; institutions; bank competition; information sharing; bankruptcy; relationship banking, bank competition, 300, credit markets, Credit Markets, D82, Asymmetrische Information, bankruptcy, information sharing, relationship banking, G21, jel: jel:D82, jel: jel:G21, jel: jel:G33, jel: jel:K10
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