Using collateral to secure loans

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Yaron Leitner (2006)
  • Subject: Loans
    mesheuropmc: education | health care economics and organizations

In “Using Collateral to Secure Loans,” Yaron Leitner asks: Why is collateral used to secure some loans, but not others? And why does collateral potentially involve more risk? He considers these questions, looking at some of the explanations for using collateral, focusing on its benefits and drawbacks.
  • References (5)

    Berger, Allen N., and Gregory F. Udell. “Collateral, Loan Quality, and Bank Risk,” Journal of Monetary Economics, 25 (1990), pp. 21-42.

    Berger, Allen N., and Gregory F. Udell. “Relationship Lending and Lines of Credit in Small Firm Finance,” Journal of Business, 68 (1995), pp. 351-81.

    Bester, Helmut. “Screening vs. Rationing in Credit Markets with Imperfect Information,” American Economic Review, 75 (1985), pp. 850-55.

    Bond, Philip, David Musto, and Bilge Yilmaz. “Predatory Lending in a Rational World,” Working Paper 06-2, Federal Reserve Bank of Philadelphia, 2005.

    Boot, Arnoud W. A., and Anjan V. Thakor. “Moral Hazard and Secured Lending in an Infinitely Repeated Credit Market Game,” International Economic Review, 35 (1994), pp. 899-920.

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