Debt renegotiation with incomplete contract

Detalhes bibliográficos
Autor(a) principal: Jorge Neto, Paulo de Melo
Data de Publicação: 2005
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Estudos Econômicos (São Paulo)
Texto Completo: https://www.revistas.usp.br/ee/article/view/35849
Resumo: A debt contract usually does not include a provision about renegotiation. The right to seize the borrower’s asset and the rules of this process are usually stipulated in the contract. Such a promise not to renegotiate is not credible since renegotiation can mitigate the dead-weight loss of liquidating insolvent borrowers. Once the initial contract may not consider the renegotiation procedure and renegotiation may occur, this paper investigates why a complete contract is not offered. It shows that the lender does not need to stipulate the renegotiation procedure on the initial contract because he is indifferent about committing or not to the terms of a contract. This indicates that a complete contract gives the lender the same expected return as an incomplete contract, in which the renegotiation process is determined after the occurrence of default.
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spelling Debt renegotiation with incomplete contract incomplete contractdebt contractrenegotiationcontrato incompletocontrato de débitorenegociação A debt contract usually does not include a provision about renegotiation. The right to seize the borrower’s asset and the rules of this process are usually stipulated in the contract. Such a promise not to renegotiate is not credible since renegotiation can mitigate the dead-weight loss of liquidating insolvent borrowers. Once the initial contract may not consider the renegotiation procedure and renegotiation may occur, this paper investigates why a complete contract is not offered. It shows that the lender does not need to stipulate the renegotiation procedure on the initial contract because he is indifferent about committing or not to the terms of a contract. This indicates that a complete contract gives the lender the same expected return as an incomplete contract, in which the renegotiation process is determined after the occurrence of default. Um contrato de débito geralmente não inclui uma cláusula sobre renegociação. O direito de liquidar os ativos do tomador e as regras do processo são habitualmente estipuladas no contrato. Tal promessa de não renegociar não é crível, já que a renegociação pode mitigar a perda bruta de se liquidar tomadores insolventes. Uma vez que o contrato inicial pode não considerar os procedimentos de renegociação, e esta pode, de fato, vir a ocorrer, este artigo investiga a razão de um contrato completo não ser ofertado. Mostra-se que o emprestador não precisa estipular os procedimentos de renegociação no contrato inicial porque ele é indiferente entre se comprometer ou não aos termos do contrato. Isto indica que um contrato completo dá ao emprestador o mesmo retorno esperado de um contrato incompleto, no qual os procedimentos de renegociação são determinados após a declaração de default. Universidade de São Paulo. Faculdade de Economia, Administração e Contabilidade2005-09-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfhttps://www.revistas.usp.br/ee/article/view/3584910.1590/S0101-41612005000300003Estudos Econômicos (São Paulo); v. 35 n. 3 (2005); 461-480 1980-53570101-4161reponame:Estudos Econômicos (São Paulo)instname:Universidade de São Paulo (USP)instacron:USPenghttps://www.revistas.usp.br/ee/article/view/35849/38565Copyright (c) 2005 Paulo de Melo Jorge Netohttp://creativecommons.org/licenses/by-nc/4.0info:eu-repo/semantics/openAccessJorge Neto, Paulo de Melo2021-02-01T10:53:39Zoai:revistas.usp.br:article/35849Revistahttps://www.revistas.usp.br/eePUBhttps://www.revistas.usp.br/ee/oaiestudoseconomicos@usp.br||aldrighi@usp.br1980-53570101-4161opendoar:2021-02-01T10:53:39Estudos Econômicos (São Paulo) - Universidade de São Paulo (USP)false
dc.title.none.fl_str_mv Debt renegotiation with incomplete contract
title Debt renegotiation with incomplete contract
spellingShingle Debt renegotiation with incomplete contract
Jorge Neto, Paulo de Melo
incomplete contract
debt contract
renegotiation
contrato incompleto
contrato de débito
renegociação
title_short Debt renegotiation with incomplete contract
title_full Debt renegotiation with incomplete contract
title_fullStr Debt renegotiation with incomplete contract
title_full_unstemmed Debt renegotiation with incomplete contract
title_sort Debt renegotiation with incomplete contract
author Jorge Neto, Paulo de Melo
author_facet Jorge Neto, Paulo de Melo
author_role author
dc.contributor.author.fl_str_mv Jorge Neto, Paulo de Melo
dc.subject.por.fl_str_mv incomplete contract
debt contract
renegotiation
contrato incompleto
contrato de débito
renegociação
topic incomplete contract
debt contract
renegotiation
contrato incompleto
contrato de débito
renegociação
description A debt contract usually does not include a provision about renegotiation. The right to seize the borrower’s asset and the rules of this process are usually stipulated in the contract. Such a promise not to renegotiate is not credible since renegotiation can mitigate the dead-weight loss of liquidating insolvent borrowers. Once the initial contract may not consider the renegotiation procedure and renegotiation may occur, this paper investigates why a complete contract is not offered. It shows that the lender does not need to stipulate the renegotiation procedure on the initial contract because he is indifferent about committing or not to the terms of a contract. This indicates that a complete contract gives the lender the same expected return as an incomplete contract, in which the renegotiation process is determined after the occurrence of default.
publishDate 2005
dc.date.none.fl_str_mv 2005-09-01
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv https://www.revistas.usp.br/ee/article/view/35849
10.1590/S0101-41612005000300003
url https://www.revistas.usp.br/ee/article/view/35849
identifier_str_mv 10.1590/S0101-41612005000300003
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv https://www.revistas.usp.br/ee/article/view/35849/38565
dc.rights.driver.fl_str_mv Copyright (c) 2005 Paulo de Melo Jorge Neto
http://creativecommons.org/licenses/by-nc/4.0
info:eu-repo/semantics/openAccess
rights_invalid_str_mv Copyright (c) 2005 Paulo de Melo Jorge Neto
http://creativecommons.org/licenses/by-nc/4.0
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Universidade de São Paulo. Faculdade de Economia, Administração e Contabilidade
publisher.none.fl_str_mv Universidade de São Paulo. Faculdade de Economia, Administração e Contabilidade
dc.source.none.fl_str_mv Estudos Econômicos (São Paulo); v. 35 n. 3 (2005); 461-480
1980-5357
0101-4161
reponame:Estudos Econômicos (São Paulo)
instname:Universidade de São Paulo (USP)
instacron:USP
instname_str Universidade de São Paulo (USP)
instacron_str USP
institution USP
reponame_str Estudos Econômicos (São Paulo)
collection Estudos Econômicos (São Paulo)
repository.name.fl_str_mv Estudos Econômicos (São Paulo) - Universidade de São Paulo (USP)
repository.mail.fl_str_mv estudoseconomicos@usp.br||aldrighi@usp.br
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