A theory of progressive lending
نویسندگان
چکیده
We characterize Pareto efficient long term ‘relational’ lending contracts with one-sided lender commitment in a context where the borrower can accumulate wealth, has intertemporal consumption smoothing preferences, and some sanctioning power following default. show negative results of Bulow Rogoff (1989) do not apply irrespective extent sanctions, borrower's preferences for smoothing, initial wealth or relative welfare weight. Borrowing, investment grow converge to first-best. Optimal allocations be implemented by backloaded ‘progressive’ lending: sequence one period loans growing size.
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ژورنال
عنوان ژورنال: Games and Economic Behavior
سال: 2023
ISSN: ['0899-8256', '1090-2473']
DOI: https://doi.org/10.1016/j.geb.2022.11.005