We address a general equilibrium model with limited-recourse collateralized loans and securitization of debts. Each borrower is required to pledge physical collateral, and bankruptcy is filed against him if claims are not fully honored. Moreover, agents have a positive amount of wealth exempt...

We address a general equilibrium model with limited-recourse collateralized loans. Borrowers are burden to constitute physical collateral guarantees, which are repossessed in case of default and delivered to the associated lenders. In addition, lenders may receive payments over collateral...