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Contracting Sequentially with Multiple Lenders

Attar, Andrea, Casamatta, Catherine, Chassagnon, Arnold and Décamps, Jean-Paul (2019) Contracting Sequentially with Multiple Lenders: the Role of Menus. Journal of Money, Credit and Banking, 51 (4). pp. 977-990.

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Identification Number : 10.1111/jmcb.12552


We study a capital market in which multiple lenders sequentially attempt at financing a single borrower under moral hazard. We show that restricting lenders to post take-it-or-leave-it offers involves a severe loss of generality: none of the equilibrium outcomes arising in this scenario survives if lenders offer menus of contracts. This result challenges the approach followed in standard models of multiple lending. From a theoretical perspective, we offer new insights on equilibrium robustness in sequential common agency games.

Item Type: Article
Sub-title: the Role of Menus
Language: English
Date: June 2019
Refereed: Yes
Uncontrolled Keywords: Multiple Lending, Menus, Strategic Default, Common Agency, Bank Competition
JEL Classification: D43 - Oligopoly and Other Forms of Market Imperfection
D82 - Asymmetric and Private Information
G33 - Bankruptcy; Liquidation
Divisions: TSE-R (Toulouse), TSM Research (Toulouse)
Site: UT1
Date Deposited: 22 Jun 2018 15:40
Last Modified: 02 Apr 2021 15:58
OAI Identifier:

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