A unique legal reform in 2004 in Sweden redistributed collateral rights from banks holding floating liens to unsecured …, we document that a zero-sum redistribution of collateral rights and the resulting reduction in collateral capacity …

In this paper, we investigate the economy-wide effects of the collateral channel by exploiting: (i) a legal reform in … Sweden in 2004 that reduced collateral values, and (ii) a dataset that covers all incorporated firms in Sweden over the … period 2000-2006. We find that the loss in collateral value reduces both the amount and the maturity of firm debt and leads …

unsecured creditors. Using a country-wide panel of all registered firms, we document that the resulting reduction in collateral …

type of collateral that is comparable to the floating lien. We explore this natural experiment to identify how collateral …-in-differences approach, we find that following the change in the law and the loss in collateral value borrowers pay a higher interest rate on … credit by their bank. The reduction in collateral value also precedes a decrease in bank monitoring intensity and frequency …

type of collateral that is comparable to the floating lien. We explore this natural experiment to identify how collateral …-in-differences approach, we find that following the change in the law and the loss in collateral value borrowers pay a higher interest rate on … credit by their bank. The reduction in collateral value also precedes a decrease in bank monitoring intensity and frequency …

We show that collateral plays an important role in the design of debt contracts, the provision of credit, and the … incentives of lenders to monitor borrowers. Using a unique dataset from a large bank containing timely assessments of collateral … collateral, spurring delinquency of borrowers on outstanding claims. We so explain why banks are senior lenders and quantify the …