EconPapers    
Economics at your fingertips  
 

Why do borrowers pledge collateral? new empirical evidence on the role of asymmetric information

Allen Berger (), Marco Espinosa-Vega (), W Frame () and Nathan H. Miller

No 2006-29, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: An important theoretical literature motivates collateral as a mechanism that mitigates adverse selection, credit rationing, and other inefficiencies that arise when borrowers hold ex ante private information. There is no clear empirical evidence regarding the central implication of this literature?that a reduction in asymmetric information reduces the incidence of collateral. We exploit exogenous variation in lender information related to the adoption of an information technology that reduces ex ante private information, and compare collateral outcomes before and after adoption. Our results are consistent with this central implication of the private-information models and support the empirical importance of this theory.

Date: 2007
New Economics Papers: this item is included in nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.frbatlanta.org/filelegacydocs/wp0629a.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.frbatlanta.org/filelegacydocs/wp0629a.pdf [301 Moved Permanently]--> https://www.frbatlanta.org/filelegacydocs/wp0629a.pdf)

Related works:
Journal Article: Why do borrowers pledge collateral? New empirical evidence on the role of asymmetric information (2011) Downloads
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:fip:fedawp:2006-29

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-11-26
Handle: RePEc:fip:fedawp:2006-29