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Collateral and Adverse Selection in Transition Countries

Author

Listed:
  • Laurent Weill
  • Christophe J. Godlewski

Abstract

This paper tackles the question of knowing whether collateral helps to solve adverse selection problems in transition countries. We use a unique data set of about four hundred bank loans in sixteen transition countries. Our findings support the view of a positive link between the presence of collateral and the risk premium, which accords with the observed risk hypothesis. This suggests that collateral does not mitigate adverse selection problems in transition countries.

Suggested Citation

  • Laurent Weill & Christophe J. Godlewski, 2009. "Collateral and Adverse Selection in Transition Countries," Eastern European Economics, Taylor & Francis Journals, vol. 47(1), pages 29-40, January.
    • Handle: RePEc:mes:eaeuec:v:47:y:2009:i:1:p:29-40
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    Cited by:

    1. repec:onb:oenbwp:y:2010:i:1:b:1 is not listed on IDEAS
    2. Zaineb Hlioui & Mohamed Gabsi & Abdelwahed Omri, 2022. "Informal Competition Effect on SMEs’ Innovation: Do Credit Constraints Matter? Evidence from Eastern European Countries," Sustainability, MDPI, vol. 14(21), pages 1-23, October.
    3. Hall, Thomas W., 2012. "The collateral channel: Evidence on leverage and asset tangibility," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 570-583.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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