Arbeitspapier
Asset-Based Lending
Asset-based lending, the supply of loans based on floating collateral, is an important source of funding for small firms. We analyze the effect of competition on asset-based loan markets on interest rate distributions and the mobility of small firms. Close monitoring of collateral by lenders results in an informational advantage for the incumbent lender and third-degree price discrimination. We find that adverse selection results in a unique equilibrium in which lenders randomize interest rates and firms switch lender with positive probability. Increased competition between lenders does not benefit firms through lower expected interest rates, neither does it improve their mobility.
- Language
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Englisch
- Bibliographic citation
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Series: Tinbergen Institute Discussion Paper ; No. TI 2019-032/VII
- Classification
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Wirtschaft
Asymmetric and Private Information; Mechanism Design
General Equilibrium and Disequilibrium: Financial Markets
- Subject
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asset-based lending
floating collateral
adverse selection
- Event
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Geistige Schöpfung
- (who)
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Bijkerk, Suzanne H.
de Vries, Casper G.
- Event
-
Veröffentlichung
- (who)
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Tinbergen Institute
- (where)
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Amsterdam and Rotterdam
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Bijkerk, Suzanne H.
- de Vries, Casper G.
- Tinbergen Institute
Time of origin
- 2019
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