On the Use of Collateral
AbstractThis paper surveys existing explanations for the use of collateral in credit markets and relates them to the empirical evidence on the subject. Collateral may be used as a screening or an incentive device in markets characterized by various forms of asymmetric and biased information. The evidence is incompatible with the use of collateral as a signal of projects' quality, while broadly consistent with explanations based on its incentive properties and asymmetric evaluation of projects.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 9805.
Date of creation: 1998
Date of revision:
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CREDIT ; CREDIT SYSTEMS ; INFORMATION ; CREDIT POLICY ; RATIONING 4RJ. 28p.;
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
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