ambiguous effects on leverage, loan margins, loan amounts, and asset prices. Increasing risk about future payoffs and endowments …

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 …

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 …

) 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 …