2000
DOI: 10.1086/262121
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Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information

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Cited by 553 publications
(301 citation statements)
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“…Examples of such papers are Bolton and Freixas (2000), Boot and Thakor (1997), Chemmanur and Fulghieri (1994), and Subrahmanyam and Titman (1999). In many of these papers, the basic problems are those of moral hazard and adverse selection.…”
Section: Literature Reviewmentioning
confidence: 99%
“…Examples of such papers are Bolton and Freixas (2000), Boot and Thakor (1997), Chemmanur and Fulghieri (1994), and Subrahmanyam and Titman (1999). In many of these papers, the basic problems are those of moral hazard and adverse selection.…”
Section: Literature Reviewmentioning
confidence: 99%
“…This is because bank monitoring is particularly valuable for good borrowers with a low p 1 . Our model inherits this feature from the model of Bolton and Freixas (2000). Note for future reference that p * 1 is continuous, rises with its first argument, and decreases with its second argument.…”
Section: Ecb Working Paper Series No 442 February 2005mentioning
confidence: 75%
“…Also our model highlights financial market entry barriers as one reason why financial systems differ, and removing them would speed up financial convergence. Specifically, we embed the adverse selection model of Bolton and Freixas (2000) in a dynamic, general equilibrium framework. Every period, a continuum of borrowers need to fund a two-stage, risky project.…”
Section: Non-technical Summarymentioning
confidence: 99%
See 1 more Smart Citation
“…3 We assume that the firm's short-term debt is instantaneously maturing, and long-term debt takes the form of a perpetual bond promising a continuous payment at rate q. In practice, a typical financial structure will involve short-term secured bank loans and long-term debentures which may be protected against dilution through restrictions on the amount of debt issuance (see, Petersen &Rajan, 1994, andBolton &Freixas, 2000). We capture this by assuming that given a fixed q the firm can instantaneously borrow up to its debt capacity, determined in our model by the value of the firm in bankruptcy.…”
Section: B Model Assumptions and Detailed Specificationmentioning
confidence: 99%