Lending without creditor rights, collateral, or reputation : The “trusted assistant” loan in 19th century China

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Nimeke: Lending without creditor rights, collateral, or reputation : The “trusted assistant” loan in 19th century China
ISBN: 978-952-323-183-2
Tekijä: Miao, Meng ; Guanjie, Niu ; Noe, Thomas
Julkaisija: Bank of Finland
Osasto / Yksikkö: Institute for Economies in Transition (BOFIT)
Sarjan nimi: BOFIT Discussion Papers
ISSN: 1456-5889
Sarjan numero: 13/2017
Julkaisuvuosi: 2017
Ilmestymispäivämäärä: 29.8.2017
Sivut: 62
Asiasanat (yso): taloushistoria; Kiina; pankit; luotonanto; luotot; sopimukset
Hakusanat: Bofit-kokoelma;
JEL: N25; G21; D86
Muut hakusanat: contracting; creditor rights; project finance; Chinese banking
Tiivistelmä: This paper considers lending to finance projects in a setting where repayment enforcement appears impossible. The loan was illegal and thus legally unenforceable. Creditors were incapable of applying private coercion to force repayment. Borrowers lacked both collateral and reputation capital. Project cash flows were unobservable. The projects were the acquisition of Imperial administrative posts by scholars in nineteenth century Qing China. The lending mechanism was the “trusted-assistant loan.” Our model of trusted-assistant lending shows that it is a renegotiation-proof implementation of efficient state dependent financing. Empirical analysis of officials’ diaries and bank records shows that the employment of trusted-assistant lending and the performance of trusted-assistant loans conforms roughly with the model’s predictions.
Tekijänoikeustiedot: https://helda.helsinki.fi/bof/copyright


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