Econometrica Vol. 57 No. 3 1989
A Note on Bankruptcy Rules and Credit Constraints in Temporary Equilibrium
Abstract
In this note it is argued that bankruptcy rules and credit constraints are intrinsically related concepts. Bankruptcy occurs because credit is constrained. By introducing the concept of a «consistent» credit rationing scheme, it can be shown that a temporary equilibrium exists if credit rationing is consistent and if lenders have more conservative expectations with regard to the borrower's future repayment capability than the borrower
- DOI
- 10.2307/1911062
- Volume
- 57
- Issue
- 3
- Pages
- 707
- Sources
- bibtex:phds-export.bib openalex crossref