00000nam 2200000zi 4500 9.938478 CaOODSP 20240522101731 m o d f cr mn||||||||| 240522t20242024oncd ob f000 0 eng d CaOODSP eng rda CaOODSP eng eng fre a-cc--- FB3-5/2024-2E-PDF Tian, Phoebe, author. The role of long-term contracting in business lending / by Phoebe Tian. [Ottawa] : Bank of Canada = Banque du Canada, 2024. ©2024 1 online resource (ii, 68 pages) : graphs. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2024-2 ISSN assigned to different series. "Last updated: February 2, 2024." Includes bibliographical references (pages 52-55). "This paper examines inefficiencies arising from a lack of long-term contracting in small business lending in China. I develop and estimate a dynamic model where firms repeatedly interact with the same lender. All loans are short-term. Collateral can be used to deter a strategic default by a firm, but the lender cannot recover the full value of the collateral in the case of a default. The endogenous contract terms—including interest rates, loan size and collateral—reflect a firm’s probability of default in equilibrium. Learning drives the dynamics of contract terms because a firm’s profitability type is unknown. Long-term contracts improve welfare mainly by mitigating the incentives for a firm to default"--Abstract, page ii. Includes abstracts in English and French. Commercial loans China. Financial institutions China. Prêts commerciaux Chine. Institutions financières Chine. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2024-2. (CaOODSP)9.806221 PDF 1.01 MB https://publications.gc.ca/collections/collection_2024/banque-bank-canada/FB3-5-2024-2-eng.pdf