Collateral and competition
The authors examine the effects of changes in competitive conditions on the structure of loan contracts. In particular, they present conditions in which greater loan market competition reduces the stringency of contractual collateral requirements, a prediction that is consistent with anecdotal evidence from loan markets. The authors also analyze the interaction between the degree of competition and the efficiency of contractual renegotiation. Insufficiently competitive markets may lead to bargaining difficulties that reduce the efficiency of renegotiable contracts. At low levels of competition negotiable contracts remain feasible only if collateral levels are inefficiently low.
|Date of creation:||2002|
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References listed on IDEAS
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- Melanie Cao & Shouyong Shi, 2000.
"Screening, Bidding, and the Loan Market Tightness,"
Center for Financial Institutions Working Papers
00-09, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Melanie Cao & Shouyong Shi, 1999. "Screening, Bidding, and the Loan Market Tightness," Cahiers de recherche CREFE / CREFE Working Papers 80, CREFE, Université du Québec à Montréal.
- Shouyong Shi & Melanie Cao, 1999. "Screening, Bidding, and the Loan Market Tightness," Working Papers 989, Queen's University, Department of Economics.
- Caminal, Ramon & Matutes, Carmen, 1997.
"Can Competition in the Credit Market be Excessive?,"
CEPR Discussion Papers
1725, C.E.P.R. Discussion Papers.
- Ramon Caminal & Carmen Matutes, 2002. "Can competition in the credit market be excessive?," UFAE and IAE Working Papers 527.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Manove, M. & Padilla, A.J. & Pagano, M., 1998.
"Collateral vs. Project Screening: a Model of Lazy Banks,"
9807, Centro de Estudios Monetarios Y Financieros-.
- Michael Manove & A. Jorge Padilla & Marco Pagano, 1998. "Collateral vs. Project Screening: A Model of Lazy Banks," CSEF Working Papers 10, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Manove, Michael & Padilla, Atilano Jorge & Pagano, Marco, 2000. "Collateral Vs. Project Screening: A Model Of Lazy Banks," CEPR Discussion Papers 2439, C.E.P.R. Discussion Papers.
- Manove, Michael & Padilla, A Jorge & Pagano, Marco, 2001. "Collateral versus Project Screening: A Model of Lazy Banks," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 726-44, Winter.
- João A. C. Santos & Stanley D. Longhofer, 1998.
"The importance of bank seniority for relationship lending,"
BIS Working Papers
58, Bank for International Settlements.
- Longhofer, Stanley D. & Santos, Joao A. C., 2000. "The Importance of Bank Seniority for Relationship Lending," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 57-89, January.
- Stanley D. Longhofer & João A. C. Santos, 1999. "The importance of bank seniority for relationship lending," Proceedings 620, Federal Reserve Bank of Chicago.
- Stanley D. Longhofer & João A.C. Santos, 1998. "The importance of bank seniority for relationship lending," Working Paper 9808, Federal Reserve Bank of Cleveland.
- Mitchell A. Petersen & Raghuram G. Rajan, 1995.
"The Effect of Credit Market Competition on Lending Relationships,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 110(2), pages 407-443.
- Mitchell A. Petersen & Raghuram G. Rajan, 1994. "The Effect of Credit Market Competition on Lending Relationships," NBER Working Papers 4921, National Bureau of Economic Research, Inc.
- Gary Gorton & Andrew Winton, 2002.
Center for Financial Institutions Working Papers
02-28, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Broecker, Thorsten, 1990. "Credit-Worthiness Tests and Interbank Competition," Econometrica, Econometric Society, vol. 58(2), pages 429-52, March.
- Mitchell Berlin & Loretta J. Mester, 1990.
"Debt covenants and renegotiation,"
90-21, Federal Reserve Bank of Philadelphia.
- Rajan, Raghuram G, 1992. " Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt," Journal of Finance, American Finance Association, vol. 47(4), pages 1367-400, September.
- Engelbrecht-Wiggans, Richard & Milgrom, Paul R. & Weber, Robert J., 1983. "Competitive bidding and proprietary information," Journal of Mathematical Economics, Elsevier, vol. 11(2), pages 161-169, April.
- Robert Hauswald & Robert Marquez, 2003. "Information Technology and Financial Services Competition," Review of Financial Studies, Society for Financial Studies, vol. 16(3), pages 921-948, July.
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