We assess the quantitative implications of collateral re-use on leverage, volatility, and welfare within an infinite …-horizon asset-pricing model with heterogeneous agents. In our model, the ability of agents to reuse frees up collateral that can be … enables agents to share risk more effectively. Allowing reuse beyond intermediate levels, however, can lead to excessive …

This paper examines the role of collateral in the financial system, with special emphasis on the implications for … financial collateral assets. Then we examine financial stability issues and the case for regulating the use of collateral. We … use of collateral is neither a sufficient nor a necessary condition for financial stability. To ensure the stability of …

decouple across secured and unsecured markets following an adverse shock to credit risk. The scarcity of underlying collateral …We study the functioning of secured and unsecured inter-bank markets in the presence of credit risk. The model …

secured and unsecured markets following an adverse shock to credit risk. The scarcity of underlying collateral may amplify the …We study the functioning of secured and unsecured interbank markets in the presence of credit risk. The model generates …

The paper studies the central bank collateral framework and its impact on banks’ liquidity under an adverse stress test … significantly after the initial shock. We find evidence of a threshold in the benefits of expanding the collateral framework and … institutions can rely on the collateral framework channel …

We build a model of collateral choice by banks that allows to recover the opportunity cost of collateral use and the … Central Bank from 2009 to 2011. The model can be used to quantify how changes in haircuts affect the collateral used by banks … rated collateral would have reduced the use of this collateral by 10% but would have increased the average funding cost …

projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral … important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), the economy … accumulates physical capital but depletes information about investment projects. As a result, collateral-driven booms end in deep …