| 来源类型 | Working Paper
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| 规范类型 | 报告
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| DOI | 10.3386/w4273
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| 来源ID | Working Paper 4273
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| The Design of Bank Loan Contracts, Collateral, and Renegotiation |
| Gary Gorton; James A. Kahn
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| 发表日期 | 1993-02-01
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| 出版年 | 1993
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| 语种 | 英语
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| 摘要 | Empirical evidence suggests that banks playa unique role in the savings-investment process, affecting firms' cost of capital and the level of investment. We argue that bank uniqueness is related to how the design of bank loan contracts allows banks to affect borrowers' choice of project risk. Unlike corporate bonds, bank loans are typically secured senior debt which contain embedded options allowing the bank to "call" the loan. The option allows the bank tv control borrowers' risk-taking activity via renegotiation of the loan. We analyze the renegotiation outcomes and show that: (1) debt forgiveness occurs; (2) monitoring by the bank is not always successful in preventing the borrower from increasing risk; (3) renegotiated interest rates are not monotonic in borrower type; (4) inefficient liquidation can occur. In renegotiation seniority and collateral are crucial because they allow the bank to threaten the borrower and liquidate inefficient projects. We show that when a prepayment option is included in the bank loan contract, bank debt is more valuable (ex ante) to borrowing firms than corporate debt; it lowers the cost of capital. |
| 主题 | Financial Economics
; Financial Institutions
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| URL | https://www.nber.org/papers/w4273
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| 来源智库 | National Bureau of Economic Research (United States)
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| 引用统计 |
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/561633
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推荐引用方式
GB/T 7714 |
Gary Gorton,James A. Kahn. The Design of Bank Loan Contracts, Collateral, and Renegotiation. 1993.
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文件名：
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w4273.pdf
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格式：
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Adobe PDF
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