The paper investigates the relationship between bank interest rate margins and collateral for loans issued to new … ventures. The analysis finds a convex U-shaped relationship. The results indicate that while provision of collateral initially …

collateral good more highly than does the lender; otherwise the optimal contract does not resemble debt. Limited collateral can …

paid. The second good thus serves as collateral, and is essential in nontrivial contracts in order to satisfy incentive … absolute risk aversion of the borrower is nonincreasing. The amount of the collateral good available to the borrower can …

constrained-efficient allocation. The key as in general equilibrium theory is to extend the commodity space in such a way that …

constrained-efficient allocation. The key as in general equilibrium theory is to extend the commodity space in such a way that …