This paper develops a financial contracting setting to explore the effects of strategic substitutabilities in venture capital financing. Strategic substitutabilities between a VC’s portfolio firms may induce a VC to provide soft entrepreneurial incentive schemes in order to limit...

We develop a model in order to explore how a bank’s equity stake in a competitor of a borrower affects the financing relationship with the borrower and product market outcomes. The bank’s affiliation with the competitor can give rise to antior pro–competitive effects. Large equity stakes...

This paper develops a contracting framework in order to explore the effects of credit derivatives on banks’ incentives to monitor loans, their incentives to intervene, and, ultimately, borrowers’ incentives to perform. We show that (i) credit derivatives with short term maturity strengthen...