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  1. www.sciencedirect.com › science › articleWhy do borrowers pledge collateral? New empirical evidence on ...

    Jan 1, 2011 · The use of collateral also imposes opportunity costs on borrowers to the extent that it ties up assets that might otherwise be put to more productive uses. Borrowers may also suffer fluctuations in their credit availability as the values of their pledgeable assets vary. The common application of collateral may also have macroeconomic consequences.

    • Allen N. Berger, Allen N. Berger, Marco A. Espinosa-Vega, W. Scott Frame, Nathan H. Miller
    • 2011

  2. www.globalbankingandfinance.com › the-role-ofUnderstanding the Role of Collateral in Loan Applications

    Jun 13, 2023 · Collateral refers to an asset or property that a borrower pledges to a lender as security against a loan. It serves as a form of protection for the lender in case the borrower defaults on the loan. There are various types of collateral that can be used in loan applications, including real estate, vehicles, equipment, inventory, securities, and ...

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  4. www.99acres.com › articles › all-about-collateralHow Collateral Works in Loan Agreements: Meaning, Types ...

    Sep 29, 2023 · Collateral refers to an asset that a borrower pledges to a lender as security for a loan. It acts as a guarantee for the lender in case the borrower defaults on the loan. Conversely, a mortgage is a type of loan used explicitly for purchasing real estate. Common types of collateral include properties, vehicles, or valuable assets.

  5. www.rba.gov.au › publications › rdpIntroduction | RDP 2021-01: The Role of Collateral in Borrowing

    There is some evidence that safer borrowers need less collateral when borrowing (e.g. Lian and Ma forthcoming) and that more conservative lenders prefer borrowers with less risk and better collateral (e.g. Jiménez et al 2014). However, identifying these effects is difficult because the collateral analysed tends to vary across borrowers, be highly illiquid, and be subject to asymmetric information problems (e.g. Benmelech and Bergman 2011).

    • Nicholas Garvin, David W Hughes, José-Luis Peydró
    • 2021

  6. www.atlantafed.org › - › mediaWhy Do Borrowers Pledge Collateral? New Empirical Evidence on ...

    For. example, lenders may often require that borrowers pledge fixed assets such as real estate, motor. vehicles, or equipment as collateral to resolve information problems instead of using evidence. acquired through strong relationships (e.g., Manove, Padilla, and Pagano 2001, Berger and Udell.

  7. www.forbes.com › personal-loans › what-is-collateralWhat Is Collateral? – Forbes Advisor

    Mar 26, 2021 · Collateral is a thing of value that a borrower can pledge to a lender to get a loan or line of credit; common examples of collateral include real estate, vehicles, cash and investments. Not only ...

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  9. www.investopedia.com › terms › cCollateralization: Definition, How It Works, Examples

    Sep 17, 2024 · Understanding Collateralization. A home mortgage and a car loan are two common examples of collateralization. The lender may seize the house or the car if the borrower defaults on the payments ...