Use of Collateral in the Argentine Banking System
The paper investigates the use of collateral in the Argentine banking system by exploiting a rich dataset administered by the Central Bank (Central de Deudores). The study focuses on commercial loans to firms with balance sheet information available over the 2001-2005 period. The first part reviews the theoretical and empirical literature and points out the pros and cons of pledging collateral in the context of the modern asymmetric information approach to banking. Afterward, the microeconomic determinants behind the probability of having a loan collateralized -and the corresponding percentage- are studied for a broad sample of firms. Descriptive and econometric results lend support to the traditional view that banks ask more collateral to riskier borrowers (contrary to the signaling approach). In particular, it is found that the probability increases with asset tangibility and the number of lending relationships, and goes down with borrower size and the proportion of short-term loans. The same variables, except for the number of lending relationships, satisfactorily explain the collateral-to-loan value. Surprisingly, no significant correlation was observed neither with the return on assets nor with borrower's performing status. Additionally, the ratio of banking debt and total liabilities to assets exert a positive effect on the use of collateral, while the percentage of loans coming from foreign (public) banks has a negative (positive) impact. These latter variables turn out to be significant only in some years, but they all were highly significant in cross-section exercises based on whole period averages.
Volume (Year): 1 (2010)
Issue (Month): 59 (July - September)
|Contact details of provider:|| Postal: Reconquista 266 - C1003ABF - Buenos Aires|
Phone: (54-11) 4348-3582
Fax: (54-11) 4348-3794
Web page: http://www.bcra.gov.ar
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bester, Helmut, 1994.
"The Role of Collateral in a Model of Debt Renegotiation,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 26(1), pages 72-86, February.
- Bester, H., 1990. "The Role Of Collateral In A Model Of Debt Renegotiation," Papers 9060, Tilburg - Center for Economic Research.
- Bester, H., 1990. "The Role of Collateral in a Model of Debt Renegotiation," Discussion Paper 1990-60, Tilburg University, Center for Economic Research.
- Helmut Bester, 1990. "The Role of Collateral in a Model of Debt Renegotiation," CEPR Financial Markets Paper 0001, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 77 Bastwick Street, London EC1V 3PZ..
- Coco, Giuseppe, 2000. " On the Use of Collateral," Journal of Economic Surveys, Wiley Blackwell, vol. 14(2), pages 191-214, April.
- Coco, G., 1998. "On the Use of Collateral," Discussion Papers 9805, Exeter University, Department of Economics.
- Bebczuk,Ricardo N., 2003. "Asymmetric Information in Financial Markets," Cambridge Books, Cambridge University Press, number 9780521797320, December.
- Bebczuk,Ricardo N., 2003. "Asymmetric Information in Financial Markets," Cambridge Books, Cambridge University Press, number 9780521793421, November.
- Coco, Giuseppe, 1999. "Collateral, heterogeneity in risk attitude and the credit market equilibrium," European Economic Review, Elsevier, vol. 43(3), pages 559-574, March.
- Coco, Guiseppe, 1997. "Collateral, Heterogeneity in Risk Attitude and the Credit Market Equilibrium," Discussion Papers 9702, Exeter University, Department of Economics.
- Black, Jane & de Meza, David & Jeffreys, David, 1996. "House Price, the Supply of Collateral and the Enterprise Economy," Economic Journal, Royal Economic Society, vol. 106(434), pages 60-75, January.
- Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
- Menkhoff, Lukas & Neuberger, Doris & Suwanaporn, Chodechai, 2006. "Collateral-based lending in emerging markets: Evidence from Thailand," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 1-21, January.
- Lukas Menkhoff & Doris Neuberger & Chodechai Suwanaporn, 2005. "Collateral-Based Lending in Emerging Markets: Evidence from Thailand," Finance 0501008, EconWPA.
When requesting a correction, please mention this item's handle: RePEc:bcr:ensayo:v:1:y:2010:i:59:p:131-166. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Federico Grillo)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.