CORDIS Project
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This research program investigates the trade-off of limited liability for entrepreneurs, companies, and banks, focusing on its impact on economic activity. By examining historical changes in limited liability from the 19th and early 20th centuries, the study aims to identify the optimal level that encourages investment…
Limited liability, the ability to walk away from certain debts, is seen as one of the hallmarks of modern economics.
In 2016, the Economist argued it is one of man’s greatest inventions that encourages investment by limiting people’s downside risk.
Nevertheless, it has shortcomings.
In the extreme, if people never have to own up to their debts, no-one would ever be willing to lend to them.
In other words, there appears to be a trade-off.In this research program I theoretically and empirically in…
ERASMUS UNIVERSITEIT ROTTERDAM
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