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Discharge of residual debt: Do private and institutional lenders differ?

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  • Kirchkamp, Oliver
  • Prömpers, Henning

Abstract

With the help of lab experiments we study the impact of discharging insolvent debtors of their residual debt. We investigate the impact of different participation rules and the impact of different types of lenders. We find that higher participation rates encourage risk taking behaviour of borrowers. Higher participation rates also reduce the amount of moonlighting. Most importantly, institutional lenders can suffer more from moonlighting than private lenders.

Suggested Citation

  • Kirchkamp, Oliver & Prömpers, Henning, 2013. "Discharge of residual debt: Do private and institutional lenders differ?," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79851, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:79851
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    1. Alwine Mohnen & Kathrin Pokorny & Dirk Sliwka, 2008. "Transparency, Inequity Aversion, and the Dynamics of Peer Pressure in Teams: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 693-720, October.
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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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