LEVERAGE DECISIONS IN THE PRESENCE OF BANKRUPTCY LAWS

Optimal leverage is modeled with and without the truncation of wealth provided by bankruptcy. Differences in optimal leverages and. in farmers' responses to government programs are examined. Under plausible conditions some risk averse farmers demand infinite debt. Together farm programs and bankruptcy laws exacerbate agency problems in lending.


Issue Date:
Sep 01 1989
Publication Type:
Working or Discussion Paper
Language:
English
Total Pages:
16




 Record created 2017-07-12, last modified 2017-08-29

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