Seminar
On the Non-Exclusivity of Loan Contracts: An Empirical Investigation
Hans Degryse (University of Tilburg)
TSE, March 11, 2013, 12:30–14:00, room MF 323
Reference
Hans Degryse (University of Tilburg), “On the Non-Exclusivity of Loan Contracts: An Empirical Investigation”, Fédération des Banques Françaises Seminar, TSE, March 11, 2013, 12:30–14:00, room MF 323.
Abstract
Theory shows that the non-exclusivity of financial contracts generates important negative contractual externalities. Employing a unique dataset, we identify how these externalities affect credit availability. Using internal information on a creditor’s willingness to lend, we find that a creditor reduces its willingness to lend to a borrower when the borrower obtains a loan at another creditor (“outside loan”). Consistent with the theoretical literature, the effect is more pronounced the larger the outside loans and it is muted if the initial lender’s existing and future loans retain seniority over outside loans and are secured with valuable collateral.
Research partnership
Fédération des Banques Françaises Research Initiative (sustainable)