Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70686
Authors: 
Berger, Allen N.
Espinosa-Vega, Marco A.
Frame, W. Scott
Miller, Nathan H.
Year of Publication: 
2007
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2006-29a
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.
Subjects: 
collateral
asymmetric information
banks
small business
credit scoring
JEL: 
G21
D82
G32
G38
Document Type: 
Working Paper

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