search query: @author Maksimovic, V. / total: 17
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| Author: | Maksimovic, V. |
| Title: | Product market imperfections and loan commitments |
| Journal: | Journal of Finance
1990 : DEC, VOL. 45:5, p. 1641-1653 |
| Index terms: | BANKS MARKETS MARKET RESEARCH LOANS MARKET STRUCTURE COMPANIES |
| Language: | eng |
| Abstract: | It is shown in a model of competitive banks that the characteristics of loan contracts are affected by product market imperfections in the borrower's industry. A bank loan commitment increases the value of a borrower firm operating in an imperfectly competitive industry and thus dominates a simple loan even in the absence of risk sharing considerations and informational asymmetries between the borrower and the bank. While it is individually rational for a firm to obtain a loan commitment, all the firms in the industry taken together are worse off by the existence of loan commitments. |
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