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- Publisher Website: 10.1016/j.jet.2022.105526
- WOS: WOS:000843011400007
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Article: Wealth, Endogenous Collateral Quality, and Financial Crises
Title | Wealth, Endogenous Collateral Quality, and Financial Crises |
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Authors | |
Issue Date | 2022 |
Citation | Journal of Economic Theory, 2022, Forthcoming, p. 105526 How to Cite? |
Abstract | We propose a model of collateralized lending in which (1) borrowers endogenously determine collateral quality and (2) lenders can produce costly information about collateral payoffs. Our model yields several novel predictions: wealthier economies use lower quality collateral in equilibrium, have more severe financial crises, and have less frequent crises. We provide both micro and macro empirical evidence. In the U.S. mortgage market wealthier lenders accept lower quality collateral, and, looking across countries, wealthier economies use lower quality collateral and the collateral channel explains the link between wealth and crisis severity. |
Persistent Identifier | http://hdl.handle.net/10722/314863 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Liu, Z | - |
dc.contributor.author | Sinclair, AJ | - |
dc.date.accessioned | 2022-08-05T09:35:57Z | - |
dc.date.available | 2022-08-05T09:35:57Z | - |
dc.date.issued | 2022 | - |
dc.identifier.citation | Journal of Economic Theory, 2022, Forthcoming, p. 105526 | - |
dc.identifier.uri | http://hdl.handle.net/10722/314863 | - |
dc.description.abstract | We propose a model of collateralized lending in which (1) borrowers endogenously determine collateral quality and (2) lenders can produce costly information about collateral payoffs. Our model yields several novel predictions: wealthier economies use lower quality collateral in equilibrium, have more severe financial crises, and have less frequent crises. We provide both micro and macro empirical evidence. In the U.S. mortgage market wealthier lenders accept lower quality collateral, and, looking across countries, wealthier economies use lower quality collateral and the collateral channel explains the link between wealth and crisis severity. | - |
dc.language | eng | - |
dc.relation.ispartof | Journal of Economic Theory | - |
dc.title | Wealth, Endogenous Collateral Quality, and Financial Crises | - |
dc.type | Article | - |
dc.identifier.email | Sinclair, AJ: andrew.sinclair@hku.hk | - |
dc.identifier.authority | Sinclair, AJ=rp02298 | - |
dc.identifier.doi | 10.1016/j.jet.2022.105526 | - |
dc.identifier.hkuros | 335107 | - |
dc.identifier.volume | Forthcoming | - |
dc.identifier.spage | 105526 | - |
dc.identifier.epage | 105526 | - |
dc.identifier.isi | WOS:000843011400007 | - |