type of collateral that is comparable to the floating lien. We explore this natural experiment to identify how collateral …-in-differences approach, we find that following the change in the law and the loss in collateral value borrowers pay a higher interest rate on … credit by their bank. The reduction in collateral value also precedes a decrease in bank monitoring intensity and frequency …

We show that collateral plays an important role in the design of debt contracts, the provision of credit, and the … incentives of lenders to monitor borrowers. Using a unique dataset from a large bank containing timely assessments of collateral … collateral, spurring delinquency of borrowers on outstanding claims. We so explain why banks are senior lenders and quantify the …