Mediating Financial Intermediation

53 Pages Posted: 16 Apr 2021 Last revised: 19 Oct 2021

See all articles by Aymeric Bellon

Aymeric Bellon

University of Pennsylvania, The Wharton School

Louis-Marie Harpedanne de Belleville

Banque de France; Paris School of Economics (PSE)

Noémie Pinardon-Touati

HEC Paris

Date Written: April 8, 2021

Abstract

This paper studies the resolution of disputes between firms and their lenders through external mediators, who suggest a non-legally binding solution to resolve a disagreement after communicating with all parties. We exploit an administrative database on firms’ outcomes matched to the French credit registry and plausible exogenous variation in eligibility to public mediators across counties for identification. Credit, employment and investment increase following the mediation, causing an overall reduction in firms’ liquidation of 34.6 percentage points. All the effects are driven by firms that borrow from more than one financial institution, supporting the view that mediators solve coordination problems between lenders.

Keywords: mediation, coordination of creditors, asymmetric information, judge instrument

Suggested Citation

Bellon, Aymeric and Harpedanne de Belleville, Louis-Marie and Harpedanne de Belleville, Louis-Marie and Pinardon-Touati, Noémie, Mediating Financial Intermediation (April 8, 2021). Proceedings of Paris December 2021 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: https://ssrn.com/abstract=3822552 or http://dx.doi.org/10.2139/ssrn.3822552

Aymeric Bellon (Contact Author)

University of Pennsylvania, The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://www.aymericbellon.com/

Louis-Marie Harpedanne de Belleville

Banque de France ( email )

Paris
France

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Noémie Pinardon-Touati

HEC Paris ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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