Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87463
Authors: 
Arping, Stefan
Year of Publication: 
2012
Series/Report no.: 
Tinbergen Institute Discussion Paper 12-146/IV/DSF49
Abstract: 
In imperfectly competitive credit markets, banks can face a tradeoff between exploiting their market power and enforcing hard budget constraints. As market power rises, banks eventually find it too costly to discipline underperforming borrowers by stopping their projects. Lending relationships become too cozy, interest rates rise, and loan performance deteriorates.
Subjects: 
Banking Competition
Soft Budget Constraint Problem
Moral Hazard
JEL: 
G2
G3
Document Type: 
Working Paper

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