A closer look at limited liability
As a legal structure, limited liability has been described as one of the greatest inventions of modern economics. On the positive side, it reduces people’s downside risk and encourages investment. On the negative side, it can create conflicts of interest between borrowers and lenders. The EU-funded HILL project will investigate (both empirically and theoretically) this trade-off in the context of entrepreneurs, non-financial companies, and banks. First introduced in the beginning of the 19th century, limited liability has existed in various forms. This project takes a historical approach and will analyse how changes in limited liability affected patenting, the introduction of new technologies, migration decisions, firms' cost of capital, firm creation, and bank risk-taking and lending decisions.
Fields of science
Funding SchemeERC-COG - Consolidator Grant
3062 PA Rotterdam
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