competition and a lower risk-free rate raise the screening costs of lending, which can result in pooling Nash equilibria with …

We develop a new theory of information production during credit booms. In our model, entrepreneurs need credit to … themselves from such diversion in two ways: collateralization and costly screening, which generates durable information about … projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral …

self-propagatory and adversely affect the supply of credit. We propose a unifying theory that models the interplay between …