We show, by means of an example, that in models where default is subject to both collateral repossession and utility … equilibrium does exist, agents never default on their promises. At the same time collateral bundles and utility functions are such … that the full repayment of debts implies that the asset price should be strictly larger than the cost of collateral …

, collateral default, production and a banking sector. We find that the welfare of the debtor is not monotonically increasing in … for both the debtor and the creditor allows for the possibility of ex post default. Collateral default enhances efficiency … CitationID="CR19">1993</CitationRef>), which use default penalties instead of collateral to induce repayment and show the …

>, <CitationRef CitationID="CR6">2010</CitationRef>), we develop a model in which both prices of the mortgage and its collateral are …

Secured debt has become a predominant form of credit. The purpose of this paper is to analyze collateral in a model of … the asset that serves as collateral, specific to each agent. The valuation of this asset will reflect its liquidity as a … collateralizable asset in contingencies. The Friedman rule is the optimal policy. For any other policy credit and the use collateral …

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 …