Introducing assets backed by physical collateral, we extend the Cornet and De Boisdeffre (2002) model of asymmetric … information to allow for default. We show that, independently of the financial-informational structure, equilibrium exists. …

Credit rationing and the use of collateral are widely observed in debt financing. To our view there is yet no … collateral is limited. In our model we show that credit rationing and the use of collateral are always necessary for debt … resulting from the information asymmetry. Furthermore, we extend the set of possible collateral to property rights over physical …

This paper analyses the role of collateral in loan contracting when companies are financed by multiple bank lenders and … the view that collateral is a strategic instrument intended to influence the bargaining position of banks. Our result …

The ex ante theory of collateral states that better informed lenders, such as informal lenders, rely less on collateral …. We test this by contrasting the use of collateral between formal and informal lenders in the same market. Indeed, formal … lenders rely more often on collateral, controlling for conventional determinants of collateral. Moreover, better information …

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 …

We examine the role of collateral in a dynamic model of optimal credit contracts in which a borrower values both … the role collateral as a deterrent to manipulation. Some assets, those that generate consumable services will necessarily … be collateralized while others may not be. Endogenous default arises when the borrower's initial wealth is low, as with …