Trautmann, Stefan T.; Vlahu, Razvan - In: Journal of Banking & Finance 37 (2013) 3, pp. 747-760
This paper experimentally studies the impact of bank and borrower fundamentals on loan repayment. We find that solvent borrowers are more likely to default strategically when the bank’s expected strength is low, although loan repayment is a Pareto dominant Nash equilibrium. Borrowers are also...