Dorset, United Kingdom: International Journal of Management
This paper examines the relationships between financial contract choices and lender-borrower behavioral modes. It is demonstrated that conventional loans can be pareto dominated by financial contracts explicitly incorporating characteristics of the borrower's product market when the intermediary's revelation of much more willing to lending is realized by the production borrower. The above result is contrary to the case when the intermediary realizes that the productive firm is much more willing to borrow. The findings provide alternative explanations for the evidence concerning lending contracts.
International journal of management 18(2), pp.179-188