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 … are financed. This result, however, crucially depends on the definition of risk. Using the second-order stochastic …

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 …

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 effective-ness. Moreover, an increasing risk of the project … are financed. This result, however, cru-cially depends on the definition of risk. Using the second-order stochastic …

the choice and use of financial covenants in private and public debt contracts, as well as the role that risk management … covenants linked to performance. Risk management attenuates the effect of uncertainty on the inclusion of financial covenants … while firms characteristics especially related to default risk intensify the effect. In bond contracts, uncertainty …

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

results suggest that by combining collateral appropriately with interest rate, borrowers with different risk levels are … separated: high-risk borrowers accept loans without collateral and with high interest rates, whereas low-risk borrowers accept … practice of screening borrowers by risk level has become a paramount consideration for both lenders and firms. This paper …

An important theoretical literature motivates collateral as a mechanism that mitigates adverse selection, credit … incidence of collateral. We exploit exogenous variation in lender information related to the adoption of an information … technology that reduces ex ante private information, and compare collateral outcomes before and after adoption. Our results are …

An important theoretical literature motivates collateral as a mechanism that mitigates adverse selection, credit … incidence of collateral. We exploit exogenous variation in lender information related to the adoption of an information … technology that reduces ex ante private information, and compare collateral outcomes before and after adoption. Our results are …

borrower quality is fixed and collateral quality is known. Holding all risk factors constant except collateral quality, we show … suggest that maturity is not lenders' primary risk management tool. Holding loan quality constant (including collateral), we … that loans on riskier collateral have higher spreads, that is, they remain riskier even though lenders require higher …