In his basic model of debt renegotiation, BESTER [1994] argues that collateral is more effective if high risk projects …, the probability of default has no impact on the collateral's effectiveness. Moreover, a higher risk of the project caused … by a higher loss given default makes the use of collateral even less effective. -- Debt renegotiation ; Collateral ; Risk …

; Transaction Costs ; Criteria for Decision-Making under Risk and Uncertainty ; Asymmetric and Private Information ; Intertemporal …

and risk-shifting in loan contracts. Our contribution reveals that collateral does not necessarily solve for the asset …We explore the determinants of liquidation values of collateral, focusing on the potential buyers of assets. When a fi …

requirements are refined by adding a risk correction term that takes into account the interdependencies of the risks of different …

We introduce and study the main properties of a class of convex risk measures that refine Expected Shortfall by … adjusted Expected Shortfalls quantify risk as the minimum amount of capital that has to be raised and injected into a financial … probability level p\in[0,1]. Through the choice of the benchmark risk profile g one can tailor the risk assessment to the specific …

credit risk amid greater uncertainty. These adverse impacts of uncertainty on bank lending (both quantity and quality) are …

We analyze optimal hedging contracts and show that although hedging aims at sharing risk, it can lead to more risk …-taking. News implying that a hedge is likely to be loss-making undermines the risk-prevention incentives of the protection seller …. This incentive problem limits the capacity to share risks and generates endogenous counterparty risk. Optimal hedging can …

Derivatives activity, motivated by risk-sharing, can breed risk-taking. Bad news about the risk of the asset underlying … the derivative increases the expected liability of a protection seller and undermines her risk-prevention incentives. This … limits risk-sharing, and may create endogenous counterparty risk and contagion from news about the hedged risk to the balance …

We examine the effect of risk-shifting incentives on the relation between collateral and corporate borrowing capacity …. The increase in gold prices during the 2008-2009 financial crisis provided a positive shock to the collateral value of … credit to firms least likely to engage in risk-shifting behavior …