counterparty risk and asset risk. In equilibrium, lenders choose to re-use collateral. This increases the circulation of the asset … states where collateral value is high and maximizes borrowing capacity when it is low. Haircuts increase both with … and generates a "collateral multiplier" effect. Finally, we show that intermediation by dealers may endogenously arise in …

investor to hold out. This model shows that the investment decision is based on the portfolio structure, risk aversion and …

Due to opaque information and weak enforcement in emerging loan markets, the need for collateral is high, whereas … borrowers lack adequate assets to pledge as collateral. How is this puzzle solved? We find for a representative sample from … Northeast Thailand that indeed most loans do not include any tangible assets as collateral. Instead, lenders enforce collateral …

order to provide a rationale for these observations, we present a model with perfectly competitive banks and risk averse … default penalties increase, the level of student risk aversion proves crucial in determining the market outcome. If risk … student risk aversion is high, high ability students are separated and student loan contracts involve a limited amount of …

, individuals cannot commit to the use of collateral as a guarantee of repayment, and both lenders and borrowers have incentives to … macroeconomic models. We provide an explanation to the question of why assets are often used as collateral, rather than simply as a … collateral …