Purpose – Seek to compare the consequences of single‐source versus multiple‐source lending for a borrower who has loans that can be prematurely terminated. Design/methodology/approach – The considered model framework is an option‐theoretic firm value model similar to Merton (1974) but...

Purpose – The purpose of this article is to determine the optimal use of collateral in order to maximize the borrower's wealth by reducing the interest rate payments. This analysis is to shed light on the fundamental question whether good or bad borrowers pledge more collateral....

Purpose – Seek to compare the consequences of single-source versus multiple-source lending for a borrower who has loans that can be prematurely terminated. Design/methodology/approach – The considered model framework is an option-theoretic firm value model similar to Merton (1974) but where...

Purpose – The purpose of this article is to determine the optimal use of collateral in order to maximize the borrower's wealth by reducing the interest rate payments. This analysis is to shed light on the fundamental question whether good or bad borrowers pledge more collateral....