Incomplete financial participation: exclusive markets, investment clubs and credit risk

Pérez Fernández, Víctor and Torres-Martínez, Juan Pablo (2012): Incomplete financial participation: exclusive markets, investment clubs and credit risk.

Abstract

We develop a general equilibrium model with incomplete financial participation and price dependent financial constraints. In our model, equilibrium exists even when agents do not have access to all financial contracts. For instance, exclusive credit lines and investment clubs are compatible with our framework. We also extend the literature of incomplete financial participation to include debts backed by price dependent collateral, and non-ordered preferences negatively affected by the amount of default.

• Item Type: MPRA Paper
• Language: English
• Keywords: Incomplete nancial participation; Exclusive credit lines; Collateralized loans
• Subjects: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets

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