We use cookies to ensure that we give you the best experience on our website. By continuing to browse this repository, you give consent for essential cookies to be used. You can read more about our Privacy and Cookie Policy.

Durham Research Online
You are in:

Moral hazards, bankruptcy costs and international financial capital mobility.

Banerji, S. and van Long, N. (2007) 'Moral hazards, bankruptcy costs and international financial capital mobility.', Review of development economics., 11 (2). pp. 369-384.


Using a model with moral hazard and bankruptcy costs, we show that the direction of intertemporal trade between countries depends on differences in their autarkic distributions of wealth. We also examine the consequences of redistribution policies and bail-out policies in this framework. We show that, in the presence of bankruptcy cost and capital market imperfections due to moral hazard, the very rich and the very poor do not undertake any risk and choose to be passive lenders. Only individuals whose wealth lies within an intermediate range choose to become entrepreneurs. Redistributive policies influence the supply of entrepreneurship and autarkic interest rates.

Item Type:Article
Full text:Full text not available from this repository.
Publisher Web site:
Record Created:19 Aug 2008
Last Modified:13 May 2009 10:32

Social bookmarking: del.icio.usConnoteaBibSonomyCiteULikeFacebookTwitterExport: EndNote, Zotero | BibTex
Look up in GoogleScholar | Find in a UK Library