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| Author: | Schäfer, D. |
| Title: | Outside collateral, preserving the value of inside collateral and sorting |
| Journal: | Schmalenbach Business Review
2001 : OCT, VOL. 53:4, p. 321-350 |
| Index terms: | Bank lending |
| Language: | eng |
| Abstract: | Within a framework of debt renegotiation and a priori private information, what is the role of outside and inside collateral? The literature shows that unobservability of the project´s returns implies that the high-risk borrower is more inclined to pledge outside collateral than is the low-risk borrower. However, this finding does not hold when the bank can observe neither the project´s returns nor the borrower´s risk class. |
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