The optimal exclusion length of borrowers after default

Andreas Krause

doi:10.1016/j.econlet.2022.110881

The optimal exclusion length of borrowers after default

Research output: Contribution to journal › Article › peer-review

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 language	English
Article number	110881
Journal	Economics Letters
Volume	220
Early online date	1 Oct 2022
DOIs	https://doi.org/10.1016/j.econlet.2022.110881
Publication status	Published - 30 Nov 2022

Bibliographical note

Funding Information:
I would like to thank the anonymous referee for their helpful comments on the proof of Proposition 1.

Keywords

Borrowing
Financial exclusion
Imperfect information
Strategic default

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.econlet.2022.110881Licence: CC BY

Cite this

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title = "The optimal exclusion length of borrowers after default",

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.",

keywords = "Borrowing, Financial exclusion, Imperfect information, Strategic default",

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The optimal exclusion length of borrowers after default

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

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Cite this