results suggest that by combining collateral appropriately with interest rate, borrowers with different risk levels are … separated: high-risk borrowers accept loans without collateral and with high interest rates, whereas low-risk borrowers accept … practice of screening borrowers by risk level has become a paramount consideration for both lenders and firms. This paper …

ways to manage risk of which one of the most important forms is interest rate risk. In this paper we use the mean … on how interest rate risk affects optimal bank investment in the loan and deposit market when derivatives are available …

subsequently materialize. Introducing default and limited collateral into general equilibrium theory (GE) allows for a theory of …

adverse selection (AS). In particular, we study how the level of such exemption affects the role of collateral depending on … higher for borrowers who are requested to post collateral. Moreover, conditional on posting collateral, the cost of credit … does not change with the level of asset exemption. Differently, in the case of AS, the decision to post collateral results …

such risk? When counterparty risk is not observable, I show that central clearing leads to higher collateral requirements … forgo incentives for transactions that use collateral only for insurance. With collusion about risk taking, a CCP needs to … charge collateral in line with the worst counterparty quality to control risk taking. Requiring more collateral reduces …

corporate finance. Specifically, we survey evidence pertaining to incentive conflicts, control rights, collateral, renegotiation …

neglected area of moral hazard; specifically the relationship between risk aversion, an entrepreneur?s wealth and the provision … of collateral. The results highlight some interesting nuances which are not characteristic of the properties of models … be negatively related to an entrepreneur?s initial wealth. Our model shows that banks can use collateral as a means of …

The paper investigates the use of collateral in the Argentine banking system by exploiting a rich dataset administered … cons of pledging collateral in the context of the modern asymmetric information approach to banking. Afterward, the … collateral to riskier borrowers (contrary to the signaling approach). In particular, it is found that the probability increases …

). By working out the sequence of market transactions, we show that the effectiveness of collateral in avoiding equilibrium …, the separation of borrower by means of sufficient collateral does not impede the emergence of credit rationing, which … results from a coordination failure among risk-neutral banks. As a consequence, even in a risk-neutral environment with …

the credit granted increases. Moreover, the data show that collateral seems to be posted by high-risk borrowers and law … risk component that generates an increase in collateral for short-term loans. Therefore, a model of "Lazy Banks" does not … risk. These results are consistent with a view of collateral as a credible mechanism for commitment against informative …