A relationship between banks and firms that emphasizes the qualitative aspects of the enterprises may represent a response to the increasing difficulties of the credit system in financing a business system in which the intangible assets are the main source of value. In this view, an empirical...

We ask whether the correlation between mortgage leverage and default is due to moral hazard (the causal effect of leverage) or adverse selection (ex-ante risky borrowers choosing larger loans). We separate these information asymmetries using a natural experiment resulting from (i) the unique...