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UID:924deb32daa22ac216f394b79d2307dd
CATEGORIES:Seminars
CREATED:20170426T191204
SUMMARY:Rocco Macchiavello - LSE
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Tropical Lending: Strategic Default, Contract Choice and Credit Constraints
  in the Coffee Chain  (with Arthur Blouin)\nAbstract:\n We use detailed con
 tract level data from a U.S.-based lender that extends loans to coffee mill
 s around the world to identify the sources of, response to and consequences
  of credit markets imperfections. We exploit unanticipated increases in ref
 erence prices to identify strategic default as a key source of moral hazard
 . Parties adapt to moral hazard through contractual forms that leverage sca
 rce relational capital and trade-off exposure to price risk vs. exposure to
  counterparty risk. The value of informal enforcement amounts to 50% of the
  value of the sale contract for repaying borrowers. A RDD shows that firms 
 are credit constrained. Additional loans are used to increase input purchas
 es from farmers rather than substituting other sources of credit. Prices pa
 id to farmers increase implying the existence of contractual externalities 
 along the supply chain. A calibration of the model suggests that the identi
 fied form of moral hazard is sufficient to generate credit constraints for 
 these.\n
DTSTAMP:20260405T212958Z
DTSTART:20170413T173000Z
DTEND:20170413T190000Z
SEQUENCE:0
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