ERC Consolidator Grant · 2020
One of Man’s Greatest Inventions? Historical Insights into Limited Liability
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 investigate this trade-off in the context of entrepreneurs, (non-financial) companies and banks. The central research question I ask is: What is the optimal level of limited liability that spurs…
From the public funding record at EU CORDIS. Describes the funded project, not the reviews below.