Private Information and Debt Renegotiation : Collateral and restructuring know how as sorting devices

What is the role of collateral and restructuring know how in a framework of debt renegotiation and a priori private information? We show that the result in the literature according to which debt renegotiation implies that the high-risk borrower is more inclined to pledge collateral than the low-risk borrower does not hold with unobservability of borrowers' risk class....

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Year of publication:	2000-02-29
Authors:	Schäfer, Dorothea
Institutions:	Institut für Bank- und Finanzwirtschaft <Berlin>
Subject:	Finanzierungstheorie \| Reorganisation \| Information

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1Introduction
2Model description
2.1Basic structure and definition of equilibrium
2.2 Strategic Default Only
2.3 A Priori Private Information and Strategic Default
2.3.1Competitive Equilibrium with Collateral
2.3.2Competitive Equilibrium with Restructuring Know How and Collateral
3 Concluding Remarks
A Appendix

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