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Credit rationing, bankruptcy cost, and the optimal debt contract for small business

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  • Ying Yan

Abstract

An examination of whether the costly random verification scheme affects the optimal debt contract for small business. It finds, contrary to Townsend (1979) and Williamson (1986, 1987), that the standard debt contract is the optimal debt contract with the costly random verification scheme.

Suggested Citation

  • Ying Yan, 1997. "Credit rationing, bankruptcy cost, and the optimal debt contract for small business," Working Papers (Old Series) 9702, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9702
    DOI: 10.26509/frbc-wp-199702
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    References listed on IDEAS

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    Cited by:

    1. Philippe Adair & Mohamed Adaskou, 2020. "Credit Rationing and Mature French SMEs: A Disequilibrium Model," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 6(1), pages 55-72, June.
    2. Philippe Adair & Mohamed Adaskou, 2016. "The determinants of credit rationing of SMEs in France: A disequilibrium model upon a balanced panel [Les déterminants du rationnement du crédit des PME en France : un modèle de déséquilibre sur un," Post-Print hal-01667299, HAL.

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