We show that illiquid assets such as bank loans are used by euro area banks both as central bank collateral for short … effects and (3) there are significant switching costs between the various uses of bank loans as collateral so historical … decisions also determine the use of bank loans as collateral. …

We establish that a monopoly bank never uses collateral as a screening device. A pooling equilibrium always exists in … which all borrowers pay the same interest rate and put zero collateral. Absence of screening leads to socially inefficient … lending in the sense that some socially productive firms are denied credit due to excessively high interest rate. …

This paper analyses the role of collateral in loan contracting when companies are financed by multiple bank lenders and … the view that collateral is a strategic instrument intended to influence the bargaining position of banks. Our result …

lending, borrower quality and collateral as a key variable in loan contract design. We used a unique data set based on the … examination of credit files of five leading German banks, thus relying on information actually used in the process of bank credit … borrower quality and the incidence or degree of collateralization. Our results indicate that the use of collateral in loan …