Gottardi, Piero; Maurin, Vincent; Monnet, Cyril - 2023 - This version: February, 2023
collateral create fragility. A dealer stands between a borrower and a financier. The dealer borrows from the financier to fund … borrower, forming a credit chain. Intermediation profits can thus act as collateral for the loan to fund the dealer's own … project. When these profits are risky, however, using them as collateral may undermine the dealer's incentives, generating …
