relation between loan risk and collateral. Specifically, we posit that different economic characteristics or types of … collateral pledges may be associated with the empirical dominance of the four different risk-collateral channels implied by … economic theory. For our sample, collateral overall is associated with lower loan risk premiums and a higher probability of ex …

An important theoretical literature motivates collateral as a mechanism that mitigates adverse selection, credit … incidence of collateral. We exploit exogenous variation in lender information related to the adoption of an information … technology that reduces ex ante private information, and compare collateral outcomes before and after adoption. Our results are …

Collateral is a widely used, but not well understood, debt-contracting feature. Two broad strands of theoretical … literature explain collateral as arising from the existence of either ex ante private information or ex post incentive problems … ex post theories of collateral are empirically dominant although the ex ante theories are also valid for customers with …

This paper analyses the determinants of collateral in loans granted to entrepreneurs and consumers. We use cross … score, are more likely to pledge collateral. At the same time, wealthier borrowers are more likely to pledge collateral in … order to benefit from a reduction in their interest costs. We also present evidence on other determinants of collateral such …

In his basic model of debt renegotiation, BESTER [1994] argues that collateral is more effective if high risk projects … high probability of default, that makes collateral more effective. Instead it turns out that, given the expected return …, the probability of default has no impact on the collateral's effectiveness. Moreover, a higher risk of the project caused …

In this paper we empirically test the recent lender-based theory for the use of collateral in bank lending. Based on a … borrowers and the lending branch of the bank to capture its information advantage and the magnitude of collateral … higher collateral requirements and lower interest rates. Moreover, competitive pressure from transaction lenders does not …

We offer a new test of the ex ante theory of collateral. Theory states that lenders rely less on collateral if they … have better information about borrowers. We test this by contrasting the use of collateral between formal and - better … informed - informal lenders in a developing financial market. Indeed, formal lenders rely about 40% more often on collateral …