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collateral constraints and endogenous entry and exit. A defining feature of our model is a non-Gaussian process of firm …
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general equilibrium (DSGE) model where borrowers use a fraction of their production (output) as collateral. We show that this …
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Financially constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. We document that the average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged...
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