Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/40334
Authors: 
Schüle, Tobias
Stadler, Manfred
Year of Publication: 
2005
Series/Report no.: 
Tübinger Diskussionsbeitrag 295
Abstract: 
In case of multiple creditors a coordination problem can arise when the borrowingfirm runs into financial distress. Even if the project's value at maturity is enoughto pay all creditors in full, some creditors may be tempted to foreclose on theirloans. We develop a model of creditor coordination where a large creditor movesbefore a continuum of small creditors, and analyze the signalling effects of the largecreditor's investment decision on the subsequent behavior of the small creditors. Thesignalling effects crucially depend on the relative size of the large creditor and therelative precision of information. We derive conditions under which pure herdingbehavior is to be expected.
Subjects: 
creditor coordination
global games
JEL: 
D82
G12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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