An increase in collateral availability can reduce the need for bank auditing. We test this hypothesis using reforms … collateral and auditing are substitute screening devices …

optimal decision making. Introducing a bank into the market increases total wealth due to the appearance of a portfolio effect …

Credit rationing and the use of collateral are widely observed in debt financing. To our view there is yet no … collateral is limited. In our model we show that credit rationing and the use of collateral are always necessary for debt … resulting from the information asymmetry. Furthermore, we extend the set of possible collateral to property rights over physical …