Credit Ratings, Collateral and Loan Characteristics: Implications for Yield

Kose John, Anthony W. Lynch and Manju Puri
Additional contact information
Anthony W. Lynch: ?

Research Papers from Stanford University, Graduate School of Business

Abstract: This paper studies how collateral affects bond yields. Using a large dataset of public bonds, we document that collateralized debt has higher yield than general debt, after controlling for credit rating. Our model of agency problems between managers and claimholders explains this puzzling result by recognizing imperfections in the rating process. We test the model's implications. Consistent with our model and in results new to the literature, we find the yield differential between secured and unsecured debt, after controlling for credit rating, is larger for low credit rating, nonmortgage assets, longer maturity and with proxies for lower levels of monitoring.

Date: 2002-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://gsbapps.stanford.edu/researchpapers/library/RP1748.pdf

Related works:
Journal Article: Credit Ratings, Collateral, and Loan Characteristics: Implications for Yield (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:1748

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().