On the Non-Exclusivity of Loan Contracts: An Empirical Investigation

H.A. Degryse, V. Ioannidou, E.L. von Schedvin

Research output: Working paperDiscussion paperOther research output

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Abstract

Credit contracts are non-exclusive. A string of theoretical papers shows that nonexclusivity generates important negative contractual externalities. Employing a unique dataset, we identify how the contractual externality stemming from the non-exclusivity of credit contracts affects credit supply. In particular, using internal information on a creditor’s willingness to lend, we find that a creditor reduces its loan supply when a borrower initiates a loan at another creditor. Consistent with the theoretical literature on contractual externalities, the effect is more pronounced the larger the loans from the other creditor. We also find that the initial creditor’s willingness to lend does not change if its existing and future loans retain seniority over the other creditors’ loans and are secured with assets whose value is high and stable over time.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages44
Volume2011-036
Publication statusPublished - 2011

Publication series

NameEBC Discussion Paper
Volume2011-036

Fingerprint

Loans
Empirical investigation
Exclusivity
Externalities
Willingness
Credit
Seniority
Asset value
Credit supply

Keywords

  • non-exclusivity
  • contractual externalities
  • credit supply
  • debt seniority

Cite this

Degryse, H. A., Ioannidou, V., & von Schedvin, E. L. (2011). On the Non-Exclusivity of Loan Contracts: An Empirical Investigation. (EBC Discussion Paper; Vol. 2011-036). Tilburg: EBC.
Degryse, H.A. ; Ioannidou, V. ; von Schedvin, E.L. / On the Non-Exclusivity of Loan Contracts : An Empirical Investigation. Tilburg : EBC, 2011. (EBC Discussion Paper).
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Degryse, HA, Ioannidou, V & von Schedvin, EL 2011 'On the Non-Exclusivity of Loan Contracts: An Empirical Investigation' EBC Discussion Paper, vol. 2011-036, EBC, Tilburg.

On the Non-Exclusivity of Loan Contracts : An Empirical Investigation. / Degryse, H.A.; Ioannidou, V.; von Schedvin, E.L.

Tilburg : EBC, 2011. (EBC Discussion Paper; Vol. 2011-036).

Research output: Working paperDiscussion paperOther research output

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Degryse HA, Ioannidou V, von Schedvin EL. On the Non-Exclusivity of Loan Contracts: An Empirical Investigation. Tilburg: EBC. 2011. (EBC Discussion Paper).