Abstract

We determine the optimal exclusion from borrowing to avoid strategic default. The optimal length is smaller if borrowers are less risky, have higher returns, markets are more competitive, deposit rates are low, and the more patient market participants are.
Original languageEnglish
Article number110881
JournalEconomics Letters
Volume220
Early online date1 Oct 2022
DOIs
Publication statusPublished - 30 Nov 2022

Keywords

  • Borrowing
  • Financial exclusion
  • Imperfect information
  • Strategic default

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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