Collateral and Adverse Selection in Transition Countries

Laurent Weill and Christophe Godlewski

Eastern European Economics, 2009, vol. 47, issue 1, 29-40

Abstract: This paper tackles the question of knowing whether collateral helps to solve adverse selection problems in transition countries. We use a unique data set of about four hundred bank loans in sixteen transition countries. Our findings support the view of a positive link between the presence of collateral and the risk premium, which accords with the observed risk hypothesis. This suggests that collateral does not mitigate adverse selection problems in transition countries.

Date: 2009
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Related works:
Working Paper: Collateral and Adverse Selection in Transition Countries (2009)
Working Paper: Collateral and adverse selection in transition countries (2009)
Working Paper: Collateral and Adverse Selection in Transition Countries (2008)
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