This paper analyzes how financial constraints affect equilibrium payoffs and behaviors in repeated Cournot games. Modifying minmax and feasible payoffs, we derive the folk theorem under financial constraints. Our theorem illustrates that introducing financial constraints shrinks the set of...

This paper studies the strategic interaction on oligopolistic markets where firms have debt obligations. For sufficiently high (low) quantities (prices) of the competitors there exists no unique strategy that maximise equity holders payoff, since whatever quantity (price) an indebted firms sets,...

The recent financial crisis led to the expansion of deposit-insurance coverage in many countries. We develop a structural model of the banking market, in which banks act as financial intermediaries between consumers who have funds and businesses that seek loans, and explore the implications of...

The new Chinese Enterprise Bankruptcy Law 2006 has been written in accordance with the best international practice. We would therefore expect to see it being used to resolve most cases of corporate financial distress. However, the law is only rarely used in practice which prompts search for...

This paper looks at whose voice is heard and whose interests are protected in the making of finance-related laws in China. To ensure its accuracy, the paper focuses on a real-life case study of the making of bankruptcy laws in 1986 and 2006. Laws provide a set of incentives and constraints on...

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...

This paper investigates a model of strategic interactions in financial networks, where the decision by one agent on whether or not to default impacts the incentives of other agents to escape default. Agents' payoffs are determined by the clearing mechanism introduced in the seminal contribution...

This paper investigates a model of default in financial networks where the decision by one agent on whether or not to default impacts the incentives of other agents to escape default. Agents' payoffs are determined by the clearing mechanism introduced in the seminal contribution of Eisenberg and...

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...