The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history
With the rapid economic growth and raising demand for debt financing, debt structure has become an important concern in the financial market nowadays. Realizing this concern, our paper aims to use experimental tools to trace human behavior in the application of theoretical findings under Optimal Deb...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Final Year Project (FYP) |
| Language: | English |
| Published: |
2011
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| Online Access: | http://hdl.handle.net/10356/44761 |
| _version_ | 1824455534529478656 |
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| author | Zhang, Yaping Chen, Feng Li, Li |
| author2 | Yohanes Eko Riyanto |
| author_facet | Yohanes Eko Riyanto Zhang, Yaping Chen, Feng Li, Li |
| author_sort | Zhang, Yaping |
| collection | NTU |
| description | With the rapid economic growth and raising demand for debt financing, debt structure has become an important concern in the financial market nowadays. Realizing this concern, our paper aims to use experimental tools to trace human behavior in the application of theoretical findings under Optimal Debt Structure framework. By closely monitoring and analyzing the experimental data obtained in 3 separate treatments, we find the optimal liquidation probability acceptable by both debtors and creditors in general is consistent with the theoretical predictions. Moreover, comparison across treatments suggests that liquidation policy functions as an effective tool in deterring strategic defaults and firm credit history gives further incentive to honest behaviors. With this study, we hope to provide supplement to the existing theoretical studies in Optimal Debt Structure and bring out possible deviations arising from human behavioural considerations in real life applications. |
| first_indexed | 2025-02-19T03:39:44Z |
| format | Final Year Project (FYP) |
| id | ntu-10356/44761 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2025-02-19T03:39:44Z |
| publishDate | 2011 |
| record_format | dspace |
| spelling | ntu-10356/447612019-12-10T13:47:17Z The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history Zhang, Yaping Chen, Feng Li, Li Yohanes Eko Riyanto School of Humanities and Social Sciences DRNTU::Social sciences::Economic theory With the rapid economic growth and raising demand for debt financing, debt structure has become an important concern in the financial market nowadays. Realizing this concern, our paper aims to use experimental tools to trace human behavior in the application of theoretical findings under Optimal Debt Structure framework. By closely monitoring and analyzing the experimental data obtained in 3 separate treatments, we find the optimal liquidation probability acceptable by both debtors and creditors in general is consistent with the theoretical predictions. Moreover, comparison across treatments suggests that liquidation policy functions as an effective tool in deterring strategic defaults and firm credit history gives further incentive to honest behaviors. With this study, we hope to provide supplement to the existing theoretical studies in Optimal Debt Structure and bring out possible deviations arising from human behavioural considerations in real life applications. Bachelor of Arts 2011-06-03T07:42:58Z 2011-06-03T07:42:58Z 2011 2011 Final Year Project (FYP) http://hdl.handle.net/10356/44761 en Nanyang Technological University 72 p. application/pdf |
| spellingShingle | DRNTU::Social sciences::Economic theory Zhang, Yaping Chen, Feng Li, Li The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history |
| title | The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history |
| title_full | The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history |
| title_fullStr | The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history |
| title_full_unstemmed | The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history |
| title_short | The optimal debt structure : economic experimental analysis on the impact of liquidation policy and credit history |
| title_sort | optimal debt structure economic experimental analysis on the impact of liquidation policy and credit history |
| topic | DRNTU::Social sciences::Economic theory |
| url | http://hdl.handle.net/10356/44761 |
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