We address a general equilibrium model with limited-recourse collateralized loans and securitization of debts. Each borrower is required to pledge physical collateral, and bankruptcy is filed against him if claims are not fully honored. Moreover, agents have a positive amount of wealth exempt...

Abstract Without requiring either financial survival assumptions or linear spanning conditions over financial spaces, we prove equilibrium existence in an abstract incomplete market economy with endogenous restricted financial participation. We apply our results to general financial structures...

We address a general equilibrium model with collateralized debt, credit contractions, and financial market segmentation. Restrictions on credit access make borrower’s optimal payment strategies–coupon payment, prepayment, and default–sensitive to idiosyncratic factors, even though the only...

When infinite-lived agents trade long-lived assets secured by durable goods, equilibrium exists without any additional debt constraints or uniform impatience conditions on agents’ characteristics. Also, price bubbles are absent when physical endowments are uniformly bounded away from zero.

We analyze the possibility of the simultaneous presence of two key features in price-taking sequential economies: collateralized credit operations and effective additional enforcement mechanisms, i.e. those implying payments besides the value of collateral guarantees. We show that these...