We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in … equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a …, and thus become delinquent. The lender renegotiates with some delinquent borrowers. In the absence of renegotiation …

We ask whether the correlation between mortgage leverage and default is due to moral hazard (the causal effect of … leverage must weigh default-prevention against market distortions due to adverse selection …

effect of loan size on default using sharp discontinuities in loan eligibility rules. This allows us to estimate the … magnitude of selection from the cross-sectional correlation between loan size and default. We find evidence of advantageous … of default by 3.7 to 4.2 percentage points, a 20 to 23 percent decrease from the mean default rate. The incentive effect …

be collateralized while others may not be. Endogenous default arises when the borrower's initial wealth is low, as with …

-term loan, and those who do default less. Additional findings suggest borrowers self-select on private information about their …

who do default less. Additional findings suggest borrowers self-select on private information about their future ability …

decisions to their ex post private information under fixed damages. Our results are robust when accounting for renegotiation. …

fail to repay. In this paper we asked whether, and to what extent, it may be beneficial to apply a screening mechanism to … purpose, we develop a two-sector infinite horizon model featuring oligopolistic small businesses and a screening contract in …-allocation government sets a harsh default sanction to deter entrepreneurs with bad projects from reentering and improves aggregate …