Che, Yeon-Koo (contributor); Spier, Kathryn E. (contributor) - 2005
. Assume v − rJ < x so that insolvency arises
with positive probability, in which case the (junior) creditor does not always … raises its borrowing K, the
likelihood of its insolvency rises, so its incentive for precautions worsens.
Next, (6) shows the …