Collateral And The Debt Maturity Choice Under Asymmetric Information

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Collateral and the Debt Maturity Choice Under Asymmetric Information

Author : Robert Lensink
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Collateral and the Debt Maturity Choice Under Asymmetric Information by : Robert Lensink

Download or read book Collateral and the Debt Maturity Choice Under Asymmetric Information written by Robert Lensink and published by . This book was released on 2008 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the choice of signaling mechanisms by firms in a loan arrangement with banks. In a world of asymmetric information, firms have several debt instruments and hence can use them simultaneously to self-select. It is shown that different separating equilibria may result for self-selection. If separation occurs, low-quality firms will always borrow long-term debt without collateral, while high-quality firms will borrow long-term debt with collateral or borrow short-term debt with or without collateral. The optimal loan policy depends on the relative signaling costs of the different signaling mechanisms. Separation will be more likely if the proportion of low-quality firms in the market is higher.

Debt Maturity, Risk, and Asymmetric Information

Author :
Publisher :
ISBN 13 :
Total Pages : 64 pages
Book Rating : 4.3/5 (121 download)

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Book Synopsis Debt Maturity, Risk, and Asymmetric Information by :

Download or read book Debt Maturity, Risk, and Asymmetric Information written by and published by . This book was released on 2004 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We test the implications of Flannery's (1986) and Diamond's (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data on over 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond's model and with much of the empirical literature. Our findings also suggest a strong quantitative role for asymmetric information in explaining debt maturity"--Abstract.

Asset Maturity, Debt Covenants, and Debt Maturity Choice

Author : Gautam Goswami
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Asset Maturity, Debt Covenants, and Debt Maturity Choice by : Gautam Goswami

Download or read book Asset Maturity, Debt Covenants, and Debt Maturity Choice written by Gautam Goswami and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The existing research on debt-maturity under asymmetric information has focused on the impact of differential information regarding asset quality on the debt maturity decision. This research has generally indicated the optimality of short-term debt financing as a vehicle of mitigating the adverse selection problem. In this paper, we consider the impact of information asymmetry regarding the maturity structure of cash flows on the debt maturity decision. We demonstrate that, in this context, long-term debt is generally the form of debt financing most effective in alleviating the adverse selection problem. We also show that costs of adverse selection may induce some mismatching of debt maturity and asset maturity in the presence of significant transaction costs.

The Short-Term Debt Choice Under Asymmetric Information

Author : David Abad
Publisher :
ISBN 13 :
Total Pages : 25 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Short-Term Debt Choice Under Asymmetric Information by : David Abad

Download or read book The Short-Term Debt Choice Under Asymmetric Information written by David Abad and published by . This book was released on 2017 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether the market level of information asymmetry affects firms' debt financing decisions. Using a sample of non-financial listed firms and a composite index based on microstructure measures of information asymmetry, we find that firms with more information asymmetry use shorter debt maturities. In addition, we find that these firms face more difficulties to access public debt and bank debt (particularly, short-term bank debt), and they have to rely on trade credit as an alternative source of short-term financing. Analyzing the associations in two subsamples based on firm size, we find that our results essentially driven by smaller companies, which are those affected by higher information asymmetries. Our findings support the information asymmetry theories of trade credit: as information asymmetry increases and, consequently, listed firms face more constraints in the credit markets, they increase the use of financing provided by their suppliers.

Debt Maturity, Risk, and Asymmetric Information

Author : Allen N. Berger
Publisher :
ISBN 13 :
Total Pages : 41 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Debt Maturity, Risk, and Asymmetric Information by : Allen N. Berger

Download or read book Debt Maturity, Risk, and Asymmetric Information written by Allen N. Berger and published by . This book was released on 2014 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test the implications of Flannery's (1986) and Diamond's (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data on over 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond's model and with much of the empirical literature. Our findings also suggest a strong quantitative role for asymmetric information in explaining debt maturity.

Sovereign Debt Maturity Structure Under Asymmetric Information

Author : Diego J. Perez
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (931 download)

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Book Synopsis Sovereign Debt Maturity Structure Under Asymmetric Information by : Diego J. Perez

Download or read book Sovereign Debt Maturity Structure Under Asymmetric Information written by Diego J. Perez and published by . This book was released on 2013 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Asymmetric Information, Corporate Finance, and Investment

Author : R. Glenn Hubbard
Publisher : University of Chicago Press
ISBN 13 : 0226355942
Total Pages : 354 pages
Book Rating : 4.2/5 (263 download)

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Book Synopsis Asymmetric Information, Corporate Finance, and Investment by : R. Glenn Hubbard

Download or read book Asymmetric Information, Corporate Finance, and Investment written by R. Glenn Hubbard and published by University of Chicago Press. This book was released on 2009-05-15 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this volume, specialists from traditionally separate areas in economics and finance investigate issues at the conjunction of their fields. They argue that financial decisions of the firm can affect real economic activity—and this is true for enough firms and consumers to have significant aggregate economic effects. They demonstrate that important differences—asymmetries—in access to information between "borrowers" and "lenders" ("insiders" and "outsiders") in financial transactions affect investment decisions of firms and the organization of financial markets. The original research emphasizes the role of information problems in explaining empirically important links between internal finance and investment, as well as their role in accounting for observed variations in mechanisms for corporate control.

Debt Maturity and Asymmetric Information

Author : Vidhan K. Goyal
Publisher :
ISBN 13 :
Total Pages : 66 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Debt Maturity and Asymmetric Information by : Vidhan K. Goyal

Download or read book Debt Maturity and Asymmetric Information written by Vidhan K. Goyal and published by . This book was released on 2014 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetric information models suggest that a borrower's choice of debt maturity depends on its private information about its default probabilities, i.e., borrowers with favorable information prefer short-term debt while those with unfavorable information prefer long-term debt. We test this implication by tracing the evolution of debt issuers' default risk following debt issuances. We find that short-term debt issuance leads to a decline in borrowers' asset volatility and an increase in their distance-to-default. The opposite is true for long-term debt issues. The results suggest that borrowers' private information about their default risk is an important determinant of their debt maturity choices.

Project Financing Versus Corporate Financing Under Asymmetric Information

Author : Anton Miglo
Publisher :
ISBN 13 :
Total Pages : 27 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Project Financing Versus Corporate Financing Under Asymmetric Information by : Anton Miglo

Download or read book Project Financing Versus Corporate Financing Under Asymmetric Information written by Anton Miglo and published by . This book was released on 2007 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Existing literature studies the effect of asymmetric information on many aspects of debt financing including debt maturity and seniority, collateral, liquidation rights, convertible debt, income bonds and sinking funds. Less is known about the effect of asymmetric information on firms' incentives to issue non-recourse debt (project financing). This paper is intended to shed new light on this issue. We analyze the choice between project financing and corporate financing when a firm's insiders have private information about the qualities of the firm's investment projects. Different informational structures and the resulting equilibria are considered. Empirical implications including new testable predictions are discussed.

Choice of Debt Maturities Under Asymmetric Information

Author : Gautam Goswami
Publisher :
ISBN 13 :
Total Pages : 306 pages
Book Rating : 4.:/5 (29 download)

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Book Synopsis Choice of Debt Maturities Under Asymmetric Information by : Gautam Goswami

Download or read book Choice of Debt Maturities Under Asymmetric Information written by Gautam Goswami and published by . This book was released on 1992 with total page 306 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Debt Financing Under Asymmetric Information

Author : Gautam Goswami
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Debt Financing Under Asymmetric Information by : Gautam Goswami

Download or read book Debt Financing Under Asymmetric Information written by Gautam Goswami and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we analyze the optimal design of debt- maturity, coupon payments, and dividend payout restrictions under asymmetric information. In our model, if the asymmetry of information is concentrated around long-term cash flows, firms finance with coupon-bearing long-term debt that partially restricts dividend payments. If the asymmetry of information is concentrated around near-term cash flows and there exists a significant possibility that they will be unable to refinance short-term debt, firms finance with coupon-bearing long-term debt that does not restrict dividend payments. Finally, if the asymmetry of information is uniformly distributed across dates, firms finance with short-term debt. Thus, it is the distribution of informational asymmetry across dates rather than the degree of information asymmetry per se that determines firms' debt-financing policies.

International Loans, Bonds, Guarantees, Legal Opinions

Author : Philip R. Wood
Publisher : Sweet & Maxwell
ISBN 13 : 1847032087
Total Pages : 493 pages
Book Rating : 4.8/5 (47 download)

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Book Synopsis International Loans, Bonds, Guarantees, Legal Opinions by : Philip R. Wood

Download or read book International Loans, Bonds, Guarantees, Legal Opinions written by Philip R. Wood and published by Sweet & Maxwell. This book was released on 2007 with total page 493 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume provides coverage of syndicated bank credit agreements and loan transfers, international bond issues including equity-linked bonds, note programs and high yield notes, bondholder trustees and collective action clauses and more.

Ownership and Asymmetric Information Problems in the Corporate Loan Market

Author : Lewis Gaul
Publisher : CreateSpace
ISBN 13 : 9781505310306
Total Pages : 32 pages
Book Rating : 4.3/5 (13 download)

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Book Synopsis Ownership and Asymmetric Information Problems in the Corporate Loan Market by : Lewis Gaul

Download or read book Ownership and Asymmetric Information Problems in the Corporate Loan Market written by Lewis Gaul and published by CreateSpace. This book was released on 2015-01-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: In credit markets, asymmetric information problems arise when borrowers have private information about their creditworthiness that is not observable by lenders. If these informational asymmetries do not negatively affect lenders' profitability, then they are irrelevant to lenders.

Structural Change in Banking

Author : Michael Klausner
Publisher : Irwin Professional Publishing
ISBN 13 :
Total Pages : 380 pages
Book Rating : 4.3/5 (91 download)

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Book Synopsis Structural Change in Banking by : Michael Klausner

Download or read book Structural Change in Banking written by Michael Klausner and published by Irwin Professional Publishing. This book was released on 1993 with total page 380 pages. Available in PDF, EPUB and Kindle. Book excerpt: The thrift crisis and recent weakness in the banking sector has intensified attention toward regulatory reform. But most proposals take as a given the traditional structure of banking, under which a bank holds illiquid loans and liquid liabilities. Structural Change in Banking explores the possibility of more fundamental changes in bank structure, which would reduce the instability that is inherent in the current structure. The major essays in this book, written by leading authors in the field, examine the historical legacy of limitations on bank branching and their consequences on bank structure and stability; how securitization affects the bank structure, risk, and liquidity; the advantages to a bank from having checking account information about its loan customers; and the potential for money market funds and finance companies to become the banks of the future. Structural Change in Banking is an essential tool for bank regulators, legislators, executives, and anyone concerned with rectifying the instability of traditional banking structure. This book not only makes a strong argument for change, it provides an intelligent analysis of alternatives through which credit can be provided.

Inside and Outside Liquidity

Author : Bengt Holmstrom
Publisher : MIT Press
ISBN 13 : 0262518538
Total Pages : 263 pages
Book Rating : 4.2/5 (625 download)

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Book Synopsis Inside and Outside Liquidity by : Bengt Holmstrom

Download or read book Inside and Outside Liquidity written by Bengt Holmstrom and published by MIT Press. This book was released on 2013-01-11 with total page 263 pages. Available in PDF, EPUB and Kindle. Book excerpt: Two leading economists develop a theory explaining the demand for and supply of liquid assets. Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets? When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively? These questions are at the center of all financial crises, including the current global one. In Inside and Outside Liquidity, leading economists Bengt Holmström and Jean Tirole offer an original, unified perspective on these questions. In a slight, but important, departure from the standard theory of finance, they show how imperfect pledgeability of corporate income leads to a demand for as well as a shortage of liquidity with interesting implications for the pricing of assets, investment decisions, and liquidity management. The government has an active role to play in improving risk-sharing between consumers with limited commitment power and firms dealing with the high costs of potential liquidity shortages. In this perspective, private risk-sharing is always imperfect and may lead to financial crises that can be alleviated through government interventions.

The Theory of Corporate Finance

Author : Jean Tirole
Publisher : Princeton University Press
ISBN 13 : 1400830222
Total Pages : 657 pages
Book Rating : 4.4/5 (8 download)

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Book Synopsis The Theory of Corporate Finance by : Jean Tirole

Download or read book The Theory of Corporate Finance written by Jean Tirole and published by Princeton University Press. This book was released on 2010-08-26 with total page 657 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Magnificent."—The Economist From the Nobel Prize–winning economist, a groundbreaking and comprehensive account of corporate finance Recent decades have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations—equity, debt, and valuation—today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of. Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics. Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions. Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.

Asymmetry of Information and Lending Risk Livelihood Pattern of Street Vendors in India

Author : Monika
Publisher : Booksclinic Publishing
ISBN 13 : 9391389708
Total Pages : 193 pages
Book Rating : 4.3/5 (913 download)

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Book Synopsis Asymmetry of Information and Lending Risk Livelihood Pattern of Street Vendors in India by : Monika

Download or read book Asymmetry of Information and Lending Risk Livelihood Pattern of Street Vendors in India written by Monika and published by Booksclinic Publishing. This book was released on 2021-09-18 with total page 193 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetry of Information and Lending Risk Livelihood pattern of Street Vendors in India. This study focuses on street vendors and their related problems to access credit from formal banking institutions. our formal sector faces the risk of asymmetric information in lending to street vendors due to which street vendors lack access to institutional financing. On the other side, public authorities normally regard street vendors as encroachers of sidewalks and pavements and do not appreciate the valuable services, which street vendors are providing to the common man. Social security coverage of street vendors is very small. Here member base organizations have a positive impact on the life of street vendors. Non-Government Organizations (NGOs), who are providing social security schemes to street vendors are few in number (2009, National Policy on Urban Street Vendors). Street Vendors provide valuable services at a cheaper price to the urban population while trying to earn a livelihood and it is the duty of the State to protect the right of this segment of the population to earn their livelihood. So, this book highlights the issues and challenges faced by street vendors and also provides feasible solutions for their development.