Creditor Rights and Strategic Default: Evidence from India

Tantri, P L (2020) Creditor Rights and Strategic Default: Evidence from India. Working Paper. SSRN.

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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.

Item Type: Monograph (Working Paper)
Date Deposited: 18 Apr 2020 04:25
Last Modified: 06 Jul 2023 19:29

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