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Handbook of Financial Intermediation and Banking
Imprint: Elsevier Science
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The growth of financial intermediation research has yielded a host of questions that have pushed "design" issues to the fore even as the boundary between financial intermediation and corporate finance has blurred. This volume presents review articles on six major topics that are connected by information-theoretic tools and characterized by valuable perspectives and important questions for future research. Touching upon a wide range of issues pertaining to the designs of securities, institutions, trading mechanisms and markets, industry structure, and regulation, this volume will encourage bold new efforts to shape financial intermediaries in the future.
* Original review articles offer valuable perspectives on research issues appearing in top journals
* Twenty articles are grouped by six major topics, together defining the leading research edge of financial intermediation
* Corporate finance researchers will find affinities in the tools, methods, and conclusions featured in these articles
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| Title of Business & Economics eBook: Handbook of Financial Intermediation and Banking | |
| Release Date: 05-27-2008 | |
| Publisher: Elsevier Science |
This eBook download is available in the following formats:
| Parent title | Handbook of Financial Intermediation... |
|---|---|
| Encrypted (DRM) | Yes |
| SKU | 9780080559926 |
| File size | 3035 |
| Security | n/a |
| Printing | Not allowed |
| Copying | Not allowed |
| Read aloud | No Sys requirements Download reader |
| Devices | Samsung Tablet, Apple Ipad & Iphone, Barnes & Noble Nook, Kobo eReader, Aluratek Libre, Iliad, Nokia, Blackberry, Hanlin |
| Note | Excellent navigation features are available via Adobe such as bookmarks and a quick access table of contents. Text search is easily accessible. An Adobe DRM-protected file is different than a pdf file in that it uses Adobe DRM (Digital Rights Management) technology, which authors and publishers use to protect their content from illegal online distribution and to set certain privileges such as restrictions on copying and printing. |
Handbook of Financial Intermediation and Banking
Chapter One
The Design of Debt Contracts
Paolo Fulghieri University of North Carolina, Chapel Hill
Eitan Goldman Indiana University, Bloomington
1. Introduction 6 2. Debt Contracts and Costly State Verification 8 2.1. Multiperiod Contracts 11 2.2. Stochastic Monitoring 12 3. Debt Contracts and the Allocation of Control Rights 13 4. Debt Contracts and the Provision of Incentives 17 5. Debt Contracts under Asymmetric Information 18 6. The Structure of Debt Contracts 24 6.1. Seniority 24 6.2. Maturity Structure 26 6.3. Collateral 32 6.4. The Number of Creditors 34 7. Concluding Remarks 36 References 36
1. INTRODUCTION
From the seminal work of Modigliani and Miller (1958) we know that in perfect capital markets the value of a firm is not affected by its choice of financial structure. This implies that the design of the contractual features of the specific securities the firm issues to raise capital is irrelevant. More generally, it also implies that the identity of the counterpart to the transaction, whether it be a financial institution or anonymous traders in the financial markets, is irrelevant.
This picture changes dramatically when the firm and investors operate under conditions of asymmetric information. The presence of informational asymmetries impairs a firm's a
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