Federal Reserve Bank of Philadelphia
نویسنده
چکیده
We examine the effects of changes in competitive conditions on the structure of loan contracts. In particular, we present conditions in which greater loan market competition reduces the stringency of contractual collateral requirements, a prediction that is consistent with anecdotal evidence from loan markets. We also analyze the interaction between the degree of competition and the efficiency of contractual renegotiation. Insufficiently competitive markets may lead to bargaining difficulties that reduce the efficiency of renegotiable contracts. At low levels of competition negotiable contracts remain feasible only if collateral levels are inefficiently low. The opinions in this article are not necessarily those of the Federal Reserve Bank of Philadelphia or of the Federal Reserve System.
منابع مشابه
ALTERNATIVE FINANCIAL SERVICE PROVIDERS AND THE SPATIAL VOID HYPOTHESIS: THE CASE OF NEw jERSEY AND DELAwARE
The views expressed here are those of the authors and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
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