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Bankruptcy Procedures with Ex Post Moral Hazard

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Abstract

The optimal design of credit contracts and bankruptcy procedures is an important policy question both in developed market economies and in countries with emerging markets. In this paper I deal with several theoretical considerations related to these important policy problems. My main concern is with the impact of relaxation of bankruptcy procedures providing for a possibility of a renegotiation of the debt instead of strictly imposing bankruptcy whenever the debtor falls into a default on his debt. I deal with this problem in a context of collateralized debt contracts in the conditions of imperfect information about the prospects of the entrepreneur and about the results of his project.

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  • Karel Janda, 2004. "Bankruptcy Procedures with Ex Post Moral Hazard," Working Papers IES 61, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    • Handle: RePEc:fau:wpaper:wp061
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    Cited by:

    1. Karel Janda, 2005. "The Comparative Statics of the Effects of Credit Guarantees and Subsidies in the Competitive Lending Market," Working Papers IES 82, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    2. Kateřina Tsolov, 2005. "ADR/GDR Potential in Central Europe," Working Papers IES 92, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    3. Karel Janda, 2006. "Lender and Borrower as Principal and Agent," Working Papers IES 2006/24, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2006.
    4. Wadim Strielkowski & Cathal O'Donoghue, 2006. "Ready to Go? EU Enlargement and Migration Potential: Lessons for the Czech Republic in the Context of Irish Migration Experience," Prague Economic Papers, Prague University of Economics and Business, vol. 2006(1), pages 14-28.
    5. Miloslav Vošvrda & Lukáš Vácha, 2007. "Heterogeneous Agents Model with the Worst Out Algorithm," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 54-66, March.
    6. Ondøej Vychodil & Ondøej Knot, 2004. "What Drives the Optimal Bankruptcy Law Design?," Working Papers IES 62, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    7. Adam Geršl, 2007. "Political Economy of Public Deficit: Perspectives for Constitutional Reform," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 67-86, March.
    8. Kolecek, Ludek, 2008. "Bankruptcy laws and debt renegotiation," Journal of Financial Stability, Elsevier, vol. 4(1), pages 40-61, April.
    9. Kateřina Šmídková & Aleš Bulíř, 2004. "Would Fast Sailing towards the Euro Be Smooth? What Fundamental Real Exchange Rates Tells Us about Acceding Economies," Working Papers IES 64, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    10. Karel Janda, 2009. "Bankruptcies With Soft Budget Constraint," Manchester School, University of Manchester, vol. 77(4), pages 430-460, July.
    11. Jan Kodera & Miroslav Vošvrda, 2005. "Production, Capital Stock and Price Dynamics in a Simple Model of Closed Economy," Working Papers IES 93, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    12. Tomáš Cahlík & Tomáš Honzák & Jana Honzáková & Marcel Jiřina & Natálie Reichlová, 2005. "Convergence of Consumption Structure," Working Papers IES 99, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    13. FrantiÜek Turnovec, 2005. "Arithmetics of Property Rights: A Leontief-type Model of Ownership Structures," Homo Oeconomicus, Institute of SocioEconomics, vol. 23, pages 371-379.
    14. Tomáš Cahlík & Adam Geršl & Michal Hlaváček & Michael Berlemann, 2005. "Market Prices as Indicators of Political Events Evidence from the Experimental Market on the Czech Republic Parliamentary Election in 2002," Working Papers IES 77, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    15. Karel Janda, 2006. "Agency Theory Approach to the Contracting between Lender and Borrower [Smluvní vztah mezi věřitelem a dlužníkem z hlediska přístupu teorie zastoupení]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2006(3), pages 34-47.
    16. František Turnovec, 2007. "New Measure of Voting Power," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 04-14, March.
    17. Ondøej Knot & Ondøej Vychodil, 2006. "Czech Bankruptcy Procedures: Ex-post Efficiency View," Working Papers IES 2006/03, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2006.

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