Monitoring, Liquidation, and Security Design.

By identifying the possibility of imposing a credible threat of liquidation as the key role of informed (bank) finance in a moral hazard context, and showing how credibility fails when liquidity values are low, this paper identifies the circumstances under which a mixture of informed and uninformed finance is optimal and explains why bank debt is typically secured, senior, and tightly held.

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Year of publication:	1996
Authors:	Repullo, R. ; Suarez, J.
Institutions:	Banca d'Italia
Subject:	BANKS \| FINANCIAL MARKET \| MORAL HAZARD

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Series:	Banca Italia - Servizio di Studi.
Type of publication:	Book / Working Paper
Notes:	44 pages
Classification:	G20 - Financial Institutions and Services. General ; G21 - Banks; Other Depository Institutions; Mortgages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005640914