Bourgeon, Jean-Marc; Dionne, Georges - In: Journal of Financial Intermediation 22 (2013) 3, pp. 353-372
The contingent claims analysis of firm financing often presents a debt renegotiation game with a passive bank that does not use its ability to force liquidation strategically, contrary to what is observed in practice. We consider two motives that may lead a bank to refuse to renegotiate:...