Creditor Rights and Strategic Default: Evidence from India

Tantri, P L (2020) Creditor Rights and Strategic Default: Evidence from India. Journal of Law And Economics. ISSN 1537-5285 (In Press)

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Abstract

I examine whether higher creditor 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 dataset, I find that loan performance is better when the law applies and that outperformance increases after a further rise in creditor 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 during the ban period.

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Tantri, P L
UNSPECIFIED
Item Type: Article
Uncontrolled Keywords: Banking, Creditor Rights, Strategic Default, Financial Institutions
Depositing User: Mohan Dass
Date Deposited: 18 Apr 2020 04:25
Last Modified: 18 Apr 2020 04:30
URI: http://eprints.exchange.isb.edu/id/eprint/1364
Publisher URL: https://ssrn.com/abstract=3543249
Publisher OA policy: http://sherpa.ac.uk/romeo/issn/0022-2186/
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