Bankruptcy Priority for Bank Deposits : a Contract Theoretic Explanation

Content Provider	Semantic Scholar
Author	Birchler, Urs W.
Copyright Year	2000
Abstract	Over the past decade several countries, including the US, have introduced or redesigned legislation that confers priority in bankruptcy upon all or some bank deposits. We argue that in the presence of contracting costs such rules can increase e¢ciency. We ...rst show in a private information model that a borrower can reduce overall costs of ...nance by letting informationally heterogeneous lenders choose between junior and senior debt. In particular, we ...nd that debt priorities reduce socially wasteful information gathering by investors. We then argue why, particularly in banking, legal standardization of debt priorities may be superior to bilateral private arrangements.
File Format	PDF HTM / HTML
Alternate Webpage(s)	https://www.econstor.eu/bitstream/10419/127988/1/wp-0001.pdf
Alternate Webpage(s)	http://www.szgerzensee.ch/download/wp-0001.pdf
Language	English
Access Restriction	Open
Subject Keyword	Bilateral filter Byrsonima crassifolia Contract agreement Financial cost Genetic Heterogeneity Information model Personally identifiable information Rule (guideline) Theory
Content Type	Text
Resource Type	Article