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Insiders and Outsiders: The Choice between Informed and Arm's‐Length Debt
| Content Provider | Semantic Scholar |
|---|---|
| Author | Rajan, Raghuram G. |
| Copyright Year | 1992 |
| Abstract | While the benefits of bank financing are relatively well understood, the costs are not. This paper argues that while informed banks make flexible financial decisions which prevent a firm's projects from going awry, the cost of this credit is that banks have bargaining power over the firm's profit once projects have begun. The firm's portfolio choice of borrowing source and the choice of priority for its debt claims attempt to optimally circumscribe the powers of banks. Copyright 1992 by American Finance Association. |
| Starting Page | 1367 |
| Ending Page | 1400 |
| Page Count | 34 |
| File Format | PDF HTM / HTML |
| DOI | 10.1111/j.1540-6261.1992.tb04662.x |
| Volume Number | 47 |
| Alternate Webpage(s) | http://faculty.chicagobooth.edu/raghuram.rajan/research/papers/io.pdf |
| Alternate Webpage(s) | http://citeseer.ist.psu.edu/viewdoc/download;jsessionid=50C82B6210703050AAFA1B5DD14F8507?doi=10.1.1.200.1169&rep=rep1&type=pdf |
| Alternate Webpage(s) | http://gsbwww.uchicago.edu/fac/raghuram.rajan/research/io.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |