Blockchain and the future of optimal financing contracts
File(s)smartcontracts__2018_05_01.pdf (394.84 KB)
Accepted version
Author(s)
Tinn, K
Type
Conference Paper
Abstract
Blockchain technology makes it possible to design Önancing contracts that are based on reliable and up-to-date records of transactions. This paper develops a theoretical model that uses dynamic contract theory to derive optimal Önancing contracts in this new environment. I show that a dynamically adjusting proÖt sharing rule is optimal and I highlight properties that determine the splitting rule. In contrast to the view that blockchain enhances traditional contracts like debt and equity by bringing e¢ ciency gains, I emphasise that blockchain allows borrowers to take e§ort decisions more frequently, which can make debt and equity contracts relatively costlier.
Date Issued
2018-06-17
Date Acceptance
2018-02-26
Publisher
Western Finance Association
Copyright Statement
© 2018 The Author.
Source
2018 WFA Meeting
Publication Status
Accepted
Start Date
2018-06-17
Finish Date
2018-06-20
Coverage Spatial
Coronado, California, USA