Creditors’ Rights and Strategic Default: Evidence from India

Prasanna Tantri
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引用次数: 7

Abstract

I examine whether stronger creditors’ rights prevent strategic default. Borrowers who cross either of two thresholds are exempt from a creditor-rights law in India. Using a loan-day-level data set, I find that loan performance is better when the law applies and that outperformance increases after a further rise in creditors’ rights. To discern the strategic motive, I use an unprecedented invalidation of the Indian currency whereby holders of high-value currency were forced to declare their cash holdings to banks. Defaulters exempt from the law showed a greater tendency to repay their loans after invalidation.
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债权人权利与战略违约:来自印度的证据
我研究了更强大的债权人权利是否能防止战略性违约。在印度,超过两个门槛中的任何一个门槛的借款人都不受债权法的约束。使用贷款日水平的数据集,我发现,当法律适用时,贷款表现更好,并且在债权人权利进一步增加后,表现更好。为了辨别其战略动机,我使用了印度货币前所未有的失效,即高价值货币的持有者被迫向银行申报其现金持有量。不受法律约束的违约者在贷款失效后偿还贷款的趋势更大。
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