Does management consulting facilitate the access to credit for start-ups? This paper tries to answer the question by developing a moral hazard framework where a firm applies for a bank loan to implement a risky project. Conditions are derived under which credit is granted only if the bank hires...

In this paper we consider a moral hazard problem between a creditworthy firm which needs funding and a bank. We first study under which conditions the firm does not obtain the loan. We then determine whether and how the intervention of an external financial institution can facilitate the access...

In this paper we propose a moral hazard model to illustrate a credit crunch scenario. A firm is denied the access to bank funding due to high informational or monitoring costs that the bank must pay to induce the firm to behave. This is likely to happen in periods of recession, when trust...