English, Article, Journal or magazine article edition: A Model of Firm Behaviour with Equity Constraints and Bankruptcy Costs Pedro Mazeda Gil

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Bookmark: http://trove.nla.gov.au/version/182533
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • A Model of Firm Behaviour with Equity Constraints and Bankruptcy Costs
Author
  • Pedro Mazeda Gil
Physical Description
  • preprint
Notes
  • Based on Greenwald and Stiglitz (1988,1990), this work explores a simple model of microeconomic behaviour which incorporates the impact of capital markets imperfections generated by asymmetric information on firms’ optimal investment decision rules. In particular, this paper analyses how a specific form of asymmetric information problem (adverse selection) may imply lower investment than otherwise through the reduction of the firms’ ability to raise external financing – either in the form of credit rationing or the ‘voluntary’ reduction of firms’ borrowing activity. The natural follow-up to this work would be to formally show how a loan market where both contractual interest rates and loan sizes are (a priori) variable may be characterised by a credit rationing equilibrium.
  • Asymmetric Information, Firm Behaviour, Investment Financing
  • RePEc:por:fepwps:134
Language
  • English
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