This theoretical paper explores screening with loan collateral when both the collateral value and the probability of …-risk borrowers may in such case be more willing to pledge collateral than low-risk borrowers. Abundant collateral then would not … signal low risk. The results may help explain the mixed empirical findings on the role of collateral. The paper also extends …

credit via revaluation of collateral and subsequent lending decisions. Specifically we examine banks' treatment of real … estate collateral during the Covid-19 crisis. First we find evidence of significant frictions in the transmission of asset … price dynamics to collateral values. Despite this we find that lending relationships reliant on real estate collateral …

If collateral for bank loans is scarce and as a result access to secured loans is restricted, the allocation of … economies with scarce collateral the optimal reserves requirement ratio is positive. …

government debt. The safest governments inefficiently restrict the amount of high quality debt that could be used as collateral …

This theoretical paper explores the effects of costly and non-costly collateral on moral hazard, when collateral value … may fluctuate. Given that all collateral is costly, stochastic collateral will entail the same positive incentive effects … as nonstochastic collateral, provided the variation in collateral value is modest. If it is large, the incentive effects …