Faure-Grimaud, Antoine and Mariotti, Thomas (1999) Optimal Debt Contracts and the Single-Crossing Condition. Economics Letters, 65 (1). pp. 85-89.
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Official URL : http://tse-fr.eu/pub/3416
Abstract
We argue that standard results proving that debt contracts can be obtained as the solution of an ex post adverse selection problem are derived without borrowers’ preferences satisfying a proper single crossing condition. For a simple example where this condition is restored, we show that the optimal financial contract is not a standard debt contract, but rather an option contract. This casts some doubts on the robustness of existing results.
Item Type: | Article |
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Language: | English |
Date: | October 1999 |
Refereed: | Yes |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Site: | UT1 |
Date Deposited: | 18 Jan 2012 05:50 |
Last Modified: | 02 Apr 2021 15:34 |
OAI Identifier: | oai:tse-fr.eu:3416 |
URI: | https://publications.ut-capitole.fr/id/eprint/1878 |