On the non-exclusivity of loan contracts: An empirical investigation

Arbeitspapier

A string of theoretical papers shows that the non-exclusivity of credit contracts generates important negative contractual externalities. Employing a unique dataset, we identify how these externalities affect the supply of credit. Using internal information on a creditor's willingness to lend, we find that a creditor reduces its credit supply when a borrower obtains a loan at another creditor (an outside loan). Consistent with the theoretical literature, the effect is more pronounced the larger the outside loans and it is muted if the initial creditor's existing and future loans retain seniority over the outside loans and are secured with valuable collateral.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Sveriges Riksbank Working Paper Series ; No. 258

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Oligopoly and Other Imperfect Markets ; Transactional Relationships; Contracts and Reputation; Networks
• Subject: non-exclusivity ; contractual externalities ; credit supply ; debt seniority ; Kreditwürdigkeit ; Kreditrisiko ; Kreditgeschäft ; Adverse Selektion ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Degryse, Hans ; Ioannidou, Vasso ; von Schedvin, Erik
• Event: Veröffentlichung
• (who): Sveriges Riksbank
• (where): Stockholm
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/81904
• Last update: 10.03.2025, 11:42 AM CET