Reputation and Credit Market Formation: How Relational Incentives and Legal Contract Enforcement Interact
Détails
ID Serval
serval:BIB_534902C223A5
Type
Rapport: document publié par une institution, habituellement élément d'une série.
Sous-type
Working paper: document de travail dans lequel l'auteur présente les résultats de ses travaux de recherche. Les working papers ont pour but de stimuler les discussions scientifiques avec les milieux intéressés et servent de base pour la publication d'articles dans des revues spécialisées.
Collection
Publications
Institution
Titre
Reputation and Credit Market Formation: How Relational Incentives and Legal Contract Enforcement Interact
Détails de l'institution
Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor
Date de publication
2009
Résumé
The evidence suggests that relational contracting and legal rules play an important role in credit markets but on the basis of the prevailing field data it is difficult to pin down their causal impact. Here we show experimentally that relational incentives are a powerful causal determinant for the existence and performance of credit markets. In fact, in the absence of legal enforcement and reputation formation opportunities the credit market breaks down almost completely while if reputation formation is possible a stable credit market emerges even in the absence of legal enforcement of debt repayment. Introducing legal enforcement of repayments causes a further significant increase in credit market trading but has only a surprisingly small impact on overall efficiency. The reason is that legal enforcement of debt repayments weakens relational incentives and exacerbates another moral hazard problem in credit markets – the choice of inefficient high-risk projects.
Création de la notice
19/10/2017 13:30
Dernière modification de la notice
21/08/2019 5:14