Bank Loan Recovery and Credit Markets: Evidence from Bank Survey Data
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Abstract
This paper analyzes the actions that banks undertake when customers cannot repay their loans. The issue has relevant implications for the strategies followed by the parties involved in designing loan contracts. Using data collected from a highly representative sample of Italian banks we provide a detailed survey of costs, duration, and effectiveness of various types of loan recovery procedures. Using econometric techniques we also investigate the conditions under which out-of-court settlements and firms' debt restructuring are feasible.
Keywords
- Credit Recovery
- Banks
- Corporate Financing