Joint Liability Lending and the Peer Selection Effect

We show that the joint liability lending contracts derived in <link rid="b4">Ghatak (2000)</link> violate an "ex post" incentive-compatibility constraint which says that the amount of joint liability cannot exceed the amount of individual liability. We derive and characterise optimal separating joint liability contracts incorporating this constraint. Copyright 2005 Royal Economic Society.

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Year of publication:	2005
Authors:	Gangopadhyay, Shubhashis ; Ghatak, Maitreesh ; Lensink, Robert
Published in:	Economic Journal. - Royal Economic Society - RES, ISSN 1468-0297. - Vol. 115.2005, 506, p. 1005-1015
Publisher:	Royal Economic Society - RES

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005072097