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- W1525535491 abstract "This paper presents direct evidence for self-enforcing dynamic contracts in sovereign bank lending. Unlike the existing empirical literature, its instrumental variables method allows for distinguishing a direct influence of past repayment problems on current spreads (a punishment effect in prices) from an indirect effect through higher expected future default probabilities. Such a punishment provides positive surplus to lenders after a default, a feature that characterizes dynamic contracts. Using data on bank loans to developing countries between 1973-1981 and constructing continuous variables for credit history, we find evidence that most of the influence of past repayment problems is through the direct, punishment channel." @default.
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- W1525535491 date "2011-04-01" @default.
- W1525535491 modified "2023-09-26" @default.
- W1525535491 title "Evidence for Dynamic Contracts in Sovereign Bank Lending" @default.
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