dc.contributor.author | Hwang, Jinyoung | |
dc.contributor.author | Jiang, Neville Nien-Heui | |
dc.contributor.author | Wang, Ping | |
dc.date.accessioned | 2020-09-13T20:40:34Z | |
dc.date.available | 2020-09-13T20:40:34Z | |
dc.date.issued | 2002 | |
dc.identifier.uri | http://hdl.handle.net/1803/15724 | |
dc.description.abstract | We build a model consisting of a borrowing firm, a lending institution (bank), and a third party influencing loan decision-making (auditor/government regulator) where a low-type firm can bribe the auditor to file an untruthful report about its true type so as to obtain a loan from the bank to finance a risky project. The main finding is that, depending on the economic environment, the bank may or may not want to deter such a collusion. This implies there may be a sudden shift from a collusion to a no-collusion equilibrium as the economic environment deteriorates. The combination of noticeable gradual deterioration in fundamentals and expectations of a sudden equilibrium-shift can trigger aggressive speculative attacks and passive withdrawals of investments even before the actual equilibrium-shift takes place. We apply this hypothesis to the case of the 1997 Korean financial crisis that features a severe over-lending problem. | |
dc.language.iso | en_US | |
dc.publisher | Vanderbilt University | en |
dc.subject | Collusion | |
dc.subject | financial crisis | |
dc.subject | dishonest auditors | |
dc.subject | over-lending | |
dc.subject | JEL Classification Number: D82 | |
dc.subject | JEL Classification Number: G30 | |
dc.subject | JEL Classification Number: O16 | |
dc.subject.other | | |
dc.title | Financial Collusion and Over-Lending | |
dc.type | Working Paper | en |
dc.description.department | Economics | |