Rehypothecation

Shengxing Zhang, Fernando Martin and David Andolfatto ()

No 806, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: Rehypothecation refers to the practice of reusing (selling or pledging as collateral) an asset that has already been pledged as collateral for a cash loan. In high inflation economies, rehypothecation improves economic welfare, but there is generally too much of it. We find that regulatory constraints that limit the practice generally serve to improve economic welfare.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:806

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