In this paper we empirically test the recent lender-based theory for the use of collateral in bank lending. Based on a … borrowers and the lending branch of the bank to capture its information advantage and the magnitude of collateral … higher collateral requirements and lower interest rates. Moreover, competitive pressure from transaction lenders does not …

observable to financiers. In a setting with uncertainty, two inputs with different collateral value and investment … has an ex-post incentive to alter the input combination towards the input with low collateral value and higher …

repossess two different types of assets in case of default: inside collateral and outside collateral. We show that the existence …