the cost of ex-post inefficiency when there are adverse aggregate shocks to the fundamental quality of collateral … shocks by engaging in collateral liquidations. Financial arbitrage by less leveraged financial intermediaries equilibrates … returns from acquiring collateral at fire-sale prices and returns from real-sector lending, inducing higher lending rates, a …

Typical models of bankruptcy and collateral rely on incomplete asset markets. In fact, bankruptcy and collateral add … and Levine (2001) can be implemented in a model with bankruptcy and collateral. The equilibrium allocation is constrained … a model with bankruptcy and collateral is fragile in the sense of Leijonhufvud's "corridor of stability," however: If …

This paper compares the equilibrium dynamics of an economy facing an aggregate collateral constraint on external debt … to the dynamics of an economy facing a collateral constraint imposed at the level of each individual agent. The aggregate … collateral constraint is intended to capture an environment in which foreign investors base their lending decisions predominantly …

The termination of a representative financial firm due to excessive leverage may lead to substantial bankruptcy costs … liquidation and the associated deadweight costs. It is shown that the optimal taxation policy to finance such transfers exhibits …

Textbook theory assumes that firm managers maximize the net present value of future cash flows. But when you ask them …

We examine how collateral affects the cost of debt capital. Theories based on borrower moral hazard and limited … pledgeable income predict that collateral increases the availability of credit and reduces its price. Testing these theories is … complicated by the very selection problem which they imply: creditors will demand collateral precisely from those borrowers who …

solvent (have more "collateral"), the deadweight agency costs of investment finance are lower. This model of investment …Bad economic times are typically associated with a high incidence of financial distress, e.g., insolvency and … finance is then embedded in a dynamic macroeconomic setting. We show that, first, since reductions in collateral in bad times …

, we find that countries with stronger legal rights for borrowers and lenders (through collateral and bankruptcy laws …