This paper studies the effects of harmonizing collateral policy in a monetary union. In 2007, the European Central Bank … replaced national collateral lists with a single list specifying which assets euro area banks can pledge as collateral. Banks … harmonized collateral framework facilitates cross-border lending to borrowing-constrained firms and, thereby, increases financial …

This paper studies the effects of harmonizing collateral policy in a monetary union. In 2007, the European Central Bank … replaced national collateral lists with a single list specifying which assets euro area banks can pledge as collateral. Banks … harmonized collateral framework facilitates cross-border lending to borrowing-constrained firms and, thereby, increases financial …

Does central bank collateral policy contribute to financial market integration? We address this question by exploiting … that, in 2007, the European Central Bank replaced national collateral frameworks by a single list. Under the single list … regime, euro area banks could pledge all euro area bank loans as collateral, not only domestic loans as before the framework …

Researchers' attempts to identify the valuation of collateral has been hampered by data limitations. We overcome this … different types of collateral. We find that securing a loan reduces borrowing costs for firms by 17 basis points. The price … effect varies across different types of collateral, with marketable securities and real estate being the most valuable types …

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 …

projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral … important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), the economy … accumulates physical capital but depletes information about investment projects. As a result, collateral-driven booms end in deep …

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 …