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Tests of ex ante versus ex post theories of collateral using private and public information

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Tests of ex ante versus ex post theories of collateral using private and public information. / Berger, Allen N.; Scott Frame, W.; Ioannidou, Vasso.
In: Journal of Financial Economics, Vol. 100, No. 1, 01.04.2011, p. 85-97.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Berger, AN, Scott Frame, W & Ioannidou, V 2011, 'Tests of ex ante versus ex post theories of collateral using private and public information', Journal of Financial Economics, vol. 100, no. 1, pp. 85-97. https://doi.org/10.1016/j.jfineco.2010.10.014

APA

Berger, A. N., Scott Frame, W., & Ioannidou, V. (2011). Tests of ex ante versus ex post theories of collateral using private and public information. Journal of Financial Economics, 100(1), 85-97. https://doi.org/10.1016/j.jfineco.2010.10.014

Vancouver

Berger AN, Scott Frame W, Ioannidou V. Tests of ex ante versus ex post theories of collateral using private and public information. Journal of Financial Economics. 2011 Apr 1;100(1):85-97. doi: 10.1016/j.jfineco.2010.10.014

Author

Berger, Allen N. ; Scott Frame, W. ; Ioannidou, Vasso. / Tests of ex ante versus ex post theories of collateral using private and public information. In: Journal of Financial Economics. 2011 ; Vol. 100, No. 1. pp. 85-97.

Bibtex

@article{d451af23bf2d4ccb92e10b1326df67c7,
title = "Tests of ex ante versus ex post theories of collateral using private and public information",
abstract = "Collateral is a widely used, but not well understood, debt contracting feature. Two broad strands of theoretical literature explain collateral as arising from the existence of either ex ante private information or ex post incentive problems between borrowers and lenders. However, the extant empirical literature has been unable to isolate each of these effects. This paper attempts to do so using a credit registry that is unique in that it allows the researcher to have access to some private information about borrower risk that is unobserved by the lender. The data also include public information about borrower risk, loan contract terms, and ex post performance for both secured and unsecured loans. The results suggest that the ex post theories of collateral are empirically dominant, although the ex ante theories are also valid for customers with short borrower–lender relations that are relatively unknown to the lender.",
keywords = "Collateral, Asymmetric Information , Banks",
author = "Berger, {Allen N.} and {Scott Frame}, W. and Vasso Ioannidou",
year = "2011",
month = apr,
day = "1",
doi = "10.1016/j.jfineco.2010.10.014",
language = "English",
volume = "100",
pages = "85--97",
journal = "Journal of Financial Economics",
issn = "0304-405X",
publisher = "Elsevier",
number = "1",

}

RIS

TY - JOUR

T1 - Tests of ex ante versus ex post theories of collateral using private and public information

AU - Berger, Allen N.

AU - Scott Frame, W.

AU - Ioannidou, Vasso

PY - 2011/4/1

Y1 - 2011/4/1

N2 - Collateral is a widely used, but not well understood, debt contracting feature. Two broad strands of theoretical literature explain collateral as arising from the existence of either ex ante private information or ex post incentive problems between borrowers and lenders. However, the extant empirical literature has been unable to isolate each of these effects. This paper attempts to do so using a credit registry that is unique in that it allows the researcher to have access to some private information about borrower risk that is unobserved by the lender. The data also include public information about borrower risk, loan contract terms, and ex post performance for both secured and unsecured loans. The results suggest that the ex post theories of collateral are empirically dominant, although the ex ante theories are also valid for customers with short borrower–lender relations that are relatively unknown to the lender.

AB - Collateral is a widely used, but not well understood, debt contracting feature. Two broad strands of theoretical literature explain collateral as arising from the existence of either ex ante private information or ex post incentive problems between borrowers and lenders. However, the extant empirical literature has been unable to isolate each of these effects. This paper attempts to do so using a credit registry that is unique in that it allows the researcher to have access to some private information about borrower risk that is unobserved by the lender. The data also include public information about borrower risk, loan contract terms, and ex post performance for both secured and unsecured loans. The results suggest that the ex post theories of collateral are empirically dominant, although the ex ante theories are also valid for customers with short borrower–lender relations that are relatively unknown to the lender.

KW - Collateral

KW - Asymmetric Information

KW - Banks

U2 - 10.1016/j.jfineco.2010.10.014

DO - 10.1016/j.jfineco.2010.10.014

M3 - Journal article

VL - 100

SP - 85

EP - 97

JO - Journal of Financial Economics

JF - Journal of Financial Economics

SN - 0304-405X

IS - 1

ER -