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 …

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 …

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

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 …

cornerstone of credit markets in most societies since antiquity. The ability to seize and sell collateral reduces the creditor … literature, less is known about the costs associated with secured borrowing. This paper surveys the burgeoning empirical … literature on secured debt and provides an assessment of the costs and benefits of secured debt …

Do bankrupt firms impose negative externalities on their non-bankrupt competitors? We propose and analyze a collateral … channel in which a firm's bankruptcy reduces collateral values of other industry participants, thereby increasing the cost of … external debt finance industry wide. To identify this collateral channel, we use a novel dataset of secured debt tranches …

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 …