Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81904
Authors: 
Degryse, Hans
Ioannidou, Vasso
von Schedvin, Erik
Year of Publication: 
2012
Series/Report no.: 
Sveriges Riksbank Working Paper Series 258
Abstract: 
A string of theoretical papers shows that the non-exclusivity of credit contracts generates important negative contractual externalities. Employing a unique dataset, we identify how these externalities affect the supply of credit. Using internal information on a creditor's willingness to lend, we find that a creditor reduces its credit supply when a borrower obtains a loan at another creditor (an outside loan). Consistent with the theoretical literature, the effect is more pronounced the larger the outside loans and it is muted if the initial creditor's existing and future loans retain seniority over the outside loans and are secured with valuable collateral.
Subjects: 
non-exclusivity
contractual externalities
credit supply
debt seniority
JEL: 
G21
G34
L13
L14
Document Type: 
Working Paper

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