Template-Type: ReDIF-Paper 1.0

Author-Name: Angelo Baglioni
Author-X-Name-First: Angelo 
Author-X-Name-Last: Baglioni
Author-Email: angelo.baglioni@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Author-Name: Luca Colombo
Author-X-Name-First: Luca 
Author-X-Name-Last: Colombo
Author-Email: lucava.colombo@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore


Author-Name: Paola Rossi
Author-X-Name-First: Paola
Author-X-Name-Last: Rossi




Title: Debt restructuring with multiple bank relationships.


Abstract: When the debt of firms in distress is dispersed, a restructuring agreement is difficult to reach
because of free riding. We develop a repeated game in which banks come across each other
frequently, allowing them to threaten a punishment in case of free riding. As the number of
lending banks grows, the chance of meeting again a bank and of being punished for free riding
increases, improving the likelihood of cooperation. Looking at Italian firms in distress, we find
that the restructuring probability increases with the number of banks up to a threshold - three
banks - beyond which coordination problems prevail.
Length: 58
Creation-Date: 2019-01
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def077.pdf
File-Format: Application/pdf
File-Function: First version, 2019
Number: def077
Classification-JEL: G21, G33. 
Keywords: banks, debt restructuring, number of creditors.
Handle: RePEc:ctc:serie1:def077