Arbeitspapier

Credit Protection and Lending Relationships

We examine the impact CDS protection on lending relationships and efficiency. CDS insulate lenders against losses from forcing borrowers into default and liquidation. This improves the credibility of foreclosure threats, which can have positive implications for borrower incentives and credit availability ex ante. However, lenders may also abuse their enhanced bargaining power vis-a-vis borrowers and extract additional surplus in debt renegotiations. If this hold up threat becomes severe, borrowers will be reluctant to agree to debt maturity designs or control right transfers that would have been optimal in the absence of CDS protection. The introduction of CDS markets may then ultimately tighten credit constraints and be detrimental to welfare.

Sprache
Englisch

Erschienen in
Series: Tinbergen Institute Discussion Paper ; No. 12-142/IV/DSF48

Klassifikation
Wirtschaft
Thema
Corporate Lending
Financial Innovation
Credit Default Swaps
Credit Derivatives
Credit Risk Transfer
Empty Creditor Problem

Ereignis
Geistige Schöpfung
(wer)
Arping, Stefan
Ereignis
Veröffentlichung
(wer)
Tinbergen Institute
(wo)
Amsterdam and Rotterdam
(wann)
2012

Handle
Letzte Aktualisierung
20.09.2024, 08:23 MESZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Arping, Stefan
  • Tinbergen Institute

Entstanden

  • 2012

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