Parlour, Christine A.; Rajan, Uday - In: American Economic Review 91 (2001) 5, pp. 1311-1328
We present a model of an unsecured loan market. Many lenders simultaneously offer loan contracts (a debt level and an interest rate) to a borrower. The borrower may accept more than one contract. Her payoff if she defaults increases in the total amount borrowed. If this payoff is high enough,...