Small and medium-sized firms often obtain capital via a mixture of relationship and arm's-length bank lending. We show that such heterogeneous multiple bank financing leads to a lower probability of ineefficient credit foreclosure than both monopoly relationship lending and homogeneous multiple...

We study the impact of reputational incentives in markets characterized by moral hazard problems. Social preferences have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and price rigidity. Reputation powerfully amplifies the...

This paper contributes to the debate on the efficacy of IMF's catalytic finance in preventing financial crises. Extending Morris and Shin (2006), we consider that the IMF's intervention policy usually exerts a signaling effect on private creditors and that several interventions in sequence may...

In case of multiple source lending even solvent firms may be forced into bankruptcy due to uncoordinated credit withdrawals of their lenders. This paper analyzes whether a debtor firm can thwart such inefficient liquidations by offering creditors the option to delay their foreclosure decision...

Empirical evidence suggests that banks often engage in refinancing of intrinsically insolvent debtors instead of writing of their non-performing loans. Such forbearance lending may induce soft budget constraints for the debtors, as it diminishes their incentives to thwart default. This paper...

Trustworthy eco-labels provide consumers with valuable information on environmentally friendly products and thus promote green consumerism. But what makes an eco-label trustworthy and what can government do to increase consumer confidence? The scant existing literature indicates that low...

The concept of differential privacy (DP) has gained substantial attention in recent years, most notably since the U.S. Census Bureau announced the adoption of the concept for its 2020 Decennial Census. However, despite its attractive theoretical properties, implementing DP in practice remains...

In this paper we investigate how demand and output price uncertainty affect investment plans of Belgian manufacturing firms. We obtain time-varying uncertainty measures at the firm and industry level from the Belgian monthly business cycle survey and investment plans from the half-yearly...

To better understand the role of taxation in the emergence of states, this article presents an incomplete contract model of an agricultural society in which information asymmetries cause inefficient taxation, and hence outmigration, uprisings, and rent-seeking, but also urbanization. We propose...

We provide a novel benefit of Alternative Risk Transfer (ART) products with parametric or index triggers. When a reinsurer has private information about his client's risk, outside reinsurers will price their reinsurance offer less aggressively. Outsiders are subject to adverse selection as only...