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The Design of Bank Loan Contracts, Collateral, and Renegotiation

Gorton, Gary - 2010

and collateral are crucial because they allow the bank to threaten the borrower and liquidate inefficient projects. We …

Persistent link: https://www.econbiz.de/10012763460

Liquidity, Pledgeability, and the Nature of Lending

Diamond, Douglas W.; Hu, Yunzhi; Rajan, Raghuram Govind - 2022

We develop a theory of how corporate lending and financial intermediation change based on the fundamentals of the firm and its environment. We focus on the interaction between the prospective net worth or liquidity of an industry and the firm’s internal governance or pledgeability. Variations...

Persistent link: https://www.econbiz.de/10013404677

The Decline of Secured Debt

Benmelech, Efraim; Kumar, Nitish; Rajan, Raghuram Govind - 2022

The share of secured debt issued (as a fraction of total corporate debt) declined steadily in the United States over the twentieth century. This stems partly from financial development giving creditors greater confidence that high quality borrowers will respect their claims even if creditors do...

Persistent link: https://www.econbiz.de/10013324188

Collateral Pricing

Benmelech, Efraim - 2008

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 …

Persistent link: https://www.econbiz.de/10012772363

House Prices, Collateral and Self-Employment

Adelino, Manuel - 2014

This paper documents the role of the collateral lending channel to facilitate small business starts and self … startup capital and can thus more easily be financed out of increases in housing as collateral; (2) manufacturing industries …

Persistent link: https://www.econbiz.de/10013064399

Overborrowing, Financial Crises and 'Macro-Prudential' Taxes

Bianchi, Javier - 2010

pecuniary externality, because private agents do not internalize how the price of assets used for collateral respond to … collective borrowing decisions, particularly when binding collateral constraints cause asset fire-sales and lead to a financial …

Persistent link: https://www.econbiz.de/10013142089

Should Derivatives Be Privileged in Bankruptcy?

Bolton, Patrick - 2011

stay on debt and collateral collection that applies to virtually all other claims. We propose a simple corporate finance …

Persistent link: https://www.econbiz.de/10013118249

A Theory of Banks, Bonds, and the Distribution of Firm Size

Russ, Katheryn Niles - 2009

We draw on stylized facts from the finance literature to build a model where altering the relative costs of bank and bond financing changes the entire distribution of firm size, with implications for the aggregate capital stock, output, and welfare. Reducing transactions costs in the bond market...

Persistent link: https://www.econbiz.de/10013155119

Did Bank Distress Stifle Innovation During the Great Depression?

Nanda, Ramana - 2014

We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms...

Persistent link: https://www.econbiz.de/10013048617

Bank Ties and Bond Market Access : Evidence on Investment-Cash Flow Sensitivity in Japan

McGuire, Patrick M. - 2003

The banking literature has established that banks can alleviate information asymmetries between lenders and borrowers, while the Q literature has used cash flow sensitivity analysis to test whether financing constraints hinder investment. This paper investigates whether bank ties in Japan were...

Persistent link: https://www.econbiz.de/10012786618