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Theories linking the reuse of collateral to financial instability have been influential in macroeconomics but empirical … evidence on them is limited. I utilize a change to bankruptcy treatment of repo collateral to provide causal evidence that … strengthened creditor rights increase credit supply and financial instability by increasing the reuse of repo collateral. Using …
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Using a large sample of private debt renegotiations from 1996 to 2011, we report that, even in the absence of any covenant violation, debt covenants are frequently renegotiated. These renegotiations primarily relax existing restrictions and result in economically large changes in existing...
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. Borrowers lacked both collateral and reputation capital. Project cash flows were unobservable. The projects were the acquisition …
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