Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/178992 
Authors: 
Year of Publication: 
2018
Series/Report no.: 
SAFE Working Paper No. 211
Publisher: 
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe, Frankfurt a. M.
Abstract: 
This paper examines bargaining as a mechanism to resolve information problems. To guide the analysis, I develop a parsimonious model of a credit negotiation between a bank and firms with varying levels of impatience. In equilibrium, impatient firms accept the bank's offer immediately, while patient firms wait and negotiate price adjustments. I test the empirical predictions using a hand-collected dataset on credit line negotiations. Firms signing the bank's offer right away draw down their line of credit after origination and default more than late signers. Late signers negotiate price adjustments more frequently, and, consistent with the model, these adjustments predict better ex post performance.
Subjects: 
Credit lines
Contract terms
Bargaining
Screening
JEL: 
G21
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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