Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212140 
Year of Publication: 
2009
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 19/2009
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This theoretical paper explores screening with loan collateral when both the collateral value and the probability of project success fluctuate. Some model versions challenge the classic findings of Bester (1985) by showing that high-risk borrowers may in such case be more willing to pledge collateral than low-risk borrowers. Abundant collateral then would not signal low risk. The results may help explain the mixed empirical findings on the role of collateral. The paper also extends the analysis of the topical subprime crises and risky real estate collateral
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-523-4
Document Type: 
Working Paper

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