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Title:Creditor coordination with social learning and endogenous timing of credit decisions PDF Logo
Authors:Schüle, Tobias
Issue Date:2006
Series/Report no.:Tübinger Diskussionsbeitrag 307
Abstract:In case of multiple source lending even solvent firms may be forced into bankruptcy due to uncoordinated credit withdrawals of their lenders. This paper analyzes whether a debtor firm can thwart such inefficient liquidations by offering creditors the option to delay their foreclosure decision rather than obliging them to simultaneous actions as suggested by Morris and Shin (2004). With this option, lenders can endogenously determine the timing of their credit decisions, trading of the informational benefit from waiting against the associated cost of delay. Our results state that the option to delay diminishes creditor coordination failure whenever the firm is expected to be in distress.
Subjects:global games
creditor coordination failure
option to delay
social learning
JEL:D82
D83
G32
G33
Persistent Identifier of the first edition:urn:nbn:de:bsz:21-opus-27244
Document Type:Working Paper
Appears in Collections:Tübinger Diskussionsbeiträge, Universität Tübingen

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