We propose an econometric model for predicting the share of bank debt held by bankrupt firms by combining a novel set … limited liability companies for the period 2010-2021. We use logistic Lasso regressions to select bankruptcy predictors from a … selection gives the best predictions of the risk of bankruptcy in firms holding high shares of the bank debt. …

We establish that a monopoly bank never uses collateral as a screening device. A pooling equilibrium always exists in … lending in the sense that some socially productive firms are denied credit due to excessively high interest rate. …