We show that collateral plays an important role in the design of debt contracts, the provision of credit, and the … incentives of lenders to monitor borrowers. Using a unique dataset from a large bank containing timely assessments of collateral … values, in conjunction with a legal reform that exogenously reduced those values, we find that the bank responded to this …

extracting the full surplus from projects, so that she inefficiently rejects marginally profitable projects. Collateral mitigates … relatively smaller information advantage face higher collateral requirements, and that technological innovations that narrow the … information advantage of local lenders, such as small business credit scoring, lead to a greater use of collateral in lending …

collateral? The literature shows that unobservability of the project’s returns implies that the high-risk borrower is more … inclined to pledge outside collateral than is the low-risk borrower. However, this finding does not hold when the bank can … collateral enables the low-risk entrepreneur to select himself, but high value outside collateral has no sorting potential at all …

factors when they decide whether to grant loans: the relationship factor, the financial statement factor, and the collateral …/guarantee factor. We also find that smaller banks place greater emphasis on the relationship and the collateral/guarantee factors, and …

psychometric test can lower the risk of the loan portfolio when used as a secondary screening mechanism for already banked …