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| Author: | Bieta, V. Milde, H. |
| Title: | Informationsasymmetrie, Kontrollrechte und Bankkreditverträge: eine spieltheoretische Analyse. |
| Journal: | Journal für Betriebswirtschaft
1996 : VOL. 46:5-6, p. 295-308 |
| Index terms: | BANKS CREDIT CONTRACTS CUSTOMERS RISK MANAGEMENT |
| Language: | ger |
| Abstract: | In this paper we study the design of contracts in a bank-borrower relationship. More precisely, we investigate the impact of bank monitoring on the borrower's project choice. Borrowers have a strong incentive to invest in high-risk projects. Banks know about this incentive. As a result they write loan contracts that prevent borrowers from risk shifting for the most time. However approaching the end of the monitoring period borrowers would dare to invest in risky assets. Comparing single monitoring with repeated monitoring we show that there is no substantial difference in the incentive to high-risk investing. |
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