[2013년 제 1차] Corporate Governance and the Role of Related Loan G
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2013-03-04
This paper investigates whether and under what circumstances related loan guarantees can induce the borrower’s private information. The model considers borrowers having related guarantees on their liabilities to the bank in a situation where the cost of default is shared between the borrower and the guarantor. We show that it requires the expected cost of default to increase sufficiently rapidly as the probability of default increases for related loan guarantees to induce the borrowers’ private information. Unlike previous models of credit markets which emphasize that collaterals are considered a self-selection mechanism, we develop a pooling equilibrium in which related loan guarantees fail to induce the borrowers’ private information.