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Rehypothecation

Author

Listed:
  • Shengxing Zhang

    (New York University)

  • Fernando Martin

    (Federal Reserve Bank of St. Louis)

  • David Andolfatto

    (Federal Reserve Bank of St. Louis)

Abstract

Rehypothecation refers to the practice of reusing (selling or pledging as collateral) an asset that has already been pledged as collateral for a cash loan. In high inflation economies, rehypothecation improves economic welfare, but there is generally too much of it. We find that regulatory constraints that limit the practice generally serve to improve economic welfare.

Suggested Citation

  • Shengxing Zhang & Fernando Martin & David Andolfatto, 2014. "Rehypothecation," 2014 Meeting Papers 806, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:806
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    References listed on IDEAS

    as
    1. John Geanakoplos, 2009. "The Leverage Cycle," Cowles Foundation Discussion Papers 1715R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2010.
    2. John Geanakoplos, 2010. "The Leverage Cycle," NBER Chapters, in: NBER Macroeconomics Annual 2009, Volume 24, pages 1-65, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Park, Hyejin & Kahn, Charles M., 2019. "Collateral, rehypothecation, and efficiency," Journal of Financial Intermediation, Elsevier, vol. 39(C), pages 34-46.

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