CONCERNING THE SEIZURE OF COLLATERAL IN COLLATERALIZED LOAN MARKETS

Autor:	Jaime Orrillo, Adriano Campos Menezes
Rok vydání:	2018
Předmět:	Economics and Econometrics Collateralized loan obligation Collateral Incomplete markets Collateralized debt obligation 0502 economics and business 05 social sciences Economics 050206 economic theory Monetary economics 050207 economics Business and International Management Finance
Zdroj:	Annals of Financial Economics. 13:1850013
ISSN:	2010-4960 2010-4952
DOI:	10.1142/s2010495218500136
Popis:	This paper deals with the frictions which arise in the transfer of collateral from borrowers to lenders in case of default in collateralized loans. We propose a simple model of collateralized loans in which the sale of assets (borrowing) is tied to the purchase of a put option written on the collateral whose exercise price is the value of debt made by the borrower who is the holder of the put. Thus, lenders protect themselves against the possibility of not being able to seize the collateral in case of default. We show that this new financial mechanism does not destroy the orderly function of markets. Lastly, a remark on efficiency will be offered.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::77cb8aa6f0bfa7714b6fad4318cd6ffe https://doi.org/10.1142/s2010495218500136 Zobrazit plný text záznamu