of the financial crisis in 2008. Such collateralized debt markets have both collateral price channel and counterparty … of contagion by endogenizing leverage (margin), asset prices, and network formation. Agents face a tradeoff between … leverage and counterparty risk. Diversification of counterparty risk generates positive externalities by reducing systemic risk …

This paper investigates contagion in financial networks through both debt and collateral markets. Payment from a … collateralized debt contract depends not only on the borrower's balance sheet but also on the price of the underlying collateral. I … show that the existence of the collateral channel of contagion amplifies the contagion from the counterparty channel, and …

affects the opportunity cost of issuing collateralized, safe debt. Covered (Naked) CDS lower (raise) credit spreads and raise … (lower) the likelihood of issuing risky debt. Lastly, we show that CDS generate credit spread and investment spillovers for …

safe rather than risky bonds is fundamentally altered. Issuing safe debt requires a transfer of profits from good states to … bad states to ensure full repayment. Alternatively, issuing risky bonds maximizes profits in good states at the expense of … default in bad states. Profits fall when credit spreads increase, which raises the opportunity cost of issuing risky debt …

We show that the liquidation value of collateral depends on who is pledging it. We employ transaction-level data on … overnight repurchase agreements (repo) and loan-level credit registry data on corporate loans. We find that borrowers on the … repo market pay a 2.6 basis points rate premium when their default risk is positively correlated with the risk of the …

the senior tranche to the price of the junior tranche of collateral. Therefore, leverage is pro-cyclical if there is more …I construct an infinite-horizon dynamic stochastic general equilibrium model with a collateral constraint and actual … taking into account the non-linear payoffs of the collateralized debt contracts and the scarcity of collateral, borrowers and …

) and a specification of the amount of collateral per dollar of lending. The latter is summarized by the margin or "haircut …" associated with the loan. Some key models of endogenous collateral constraints imply that the primary equilibrating force will be … the part of borrowers has profound effects on asset prices. Quantitative analysis of a model of collateral equilibrium …