Citation

Discussion Paper Details

Please find the details for DP4821 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Passive Creditors

Author(s): Koen Schoors and Konstantin Sonin

Publication Date: December 2004

Keyword(s): arrears, bad loans, bank closure, bankruptcy and creditor passivity

Programme Area(s): Institutions and Economic Performance

Abstract: Creditors are often passive because they are reluctant to show bad debts on their own balance sheets. We propose a simple general equilibrium model to study the externality effect of creditor passivity. The model yields rich insights into the phenomenon of creditor passivity, both in transition and developed market economies. Policy implications are deduced. The model also explains in what respect banks differ from enterprises and what this implies for policy. Commonly observed phenomena in the banking sector, such as deposit insurance, lender of last resort facilities, government coordination to work out bad loans and special bank closure provisions, are interpreted in our framework.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4821

Bibliographic Reference

Schoors, K and Sonin, K. 2004. 'Passive Creditors'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4821