We analyse how soft information acquired at a cost by a lender affects the debt contract between the lender and a project manager, and the manager's incentive to invest in a specific asset. Under certain conditions, the lender chooses to acquire soft information about the profitability of the...

The contribution of this paper is in emphasizing endogenous credit rationing in the analysis of effects of bankruptcy rules on entrepeneurs' decisions with respect to risk-taking and ex ante skill-development. Unlike most of the literature, both the debt claim and the amount of debt financing is...

Infrastructure requirements have long played an important role in the development debate. Until recently these requirements referred to the need for improvements in roads, railways, electricity supply, telecommunications and the like. Lack of such infrastructure was seen as an important cause of...

The contribution of this paper is in emphasizing endogenous credit rationing in the <p> analysis of effects of bankruptcy rules on entrepeneurs’ decisions with respect to risk-taking <p> and ex ante skill-development. Unlike most of the literature, both the debt claim <p> and the amount of debt...</p></p></p>