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Title:Repayment versus investment conditions and exclusivity in lending contracts PDF Logo
Authors:Bougheas, Spiros P.
Dasgupta, Indraneel
Morrissey, Oliver
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4604
Abstract:Lenders condition future loans on some index of past performance. Typically, banks condition future loans on repayments of earlier obligations whilst international organizations (official lenders) condition future loans on the implementation of some policy action ('investment'). We build an agency model that accounts for these tendencies. The optimal conditionality contract depends on exclusivity - the likelihood that a borrower who has been denied funds from the original lenders can access funds from other lenders.
Subjects:Long-term loans
investment conditions
repayment conditions
exclusivity
JEL:G21
F34
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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