We examine the effect of risk-shifting incentives on the relation between collateral and corporate borrowing capacity …. The increase in gold prices during the 2008-2009 financial crisis provided a positive shock to the collateral value of …

Collateral plays two roles. It may be used as an ex-ante commitment mechanism against agency risk or for hedging … percentage points, controlling for the supply of collateral, but the same change in default risk leads to no change in … collateralization. We also uncover a collateral “pecking order” driven solely by commitment concerns. While the bank is willing to …

securitizing collateral through Special Purpose Vehicles (SPVs) and test how collateral values impact corporate risk management … with exposure to these risks and that rely on SPVs. Supporting the collateral constraints literature, the effect is weaker … for firms that likely need the collateral for external financing, such as financially constrained firms. Our findings …

Procyclicality of collateral haircuts and margins has become a widely proclaimed behavior and is currently discussed … a trigger of liquidity spirals due to its tightening effect of collateral portfolio values in times of market distress … design for macroprudential haircut add-ons. Our results confirm that (1) bond collateral markets face irrational, i.e. bubble …