The Uniqueness Of Short Term Collateralization
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The Uniqueness Of Short Term Collateralization
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Author : Leora Klapper
language : en
Publisher: World Bank Publications
Release Date : 2001
The Uniqueness Of Short Term Collateralization written by Leora Klapper and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Bank loans categories.
A secured letter-of-credit loan allows a lender to make larger loans than would be permissible on an unsecured basis, maximizing a risky borrower's investment capital. Empirical evidence shows that secured letters of credit are used by borrowers who are informationally opaque and have higher observable risk. Such borrowers also have fewer growth opportunities and are less likely to pay dividends.
The Uniqueness Of Short Term Collateralization
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Author : Leora Klapper
language : en
Publisher:
Release Date : 1999
The Uniqueness Of Short Term Collateralization written by Leora Klapper and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
February 2001 A secured letter-of-credit loan allows a lender to make larger loans than would be permissible on an unsecured basis, maximizing a risky borrower's investment capital. Empirical evidence shows that secured letters of credit are used by borrowers who are informationally opaque and have higher observable risk. Such borrowers also have fewer growth opportunities and are less likely to pay dividends. Klapper finds evidence that lines of credit secured by accounts receivable are associated with business borrowers with a high risk of default. While an unsecured short-term loan is repaid from the borrower's future cash flow, a loan secured by accounts receivable (a unique form of "inside" collateral) is repaid from previously generated and observed sales (the borrower's trade credit terms to its customers). Consequently, lenders that secure accounts receivable are most concerned with the credit risk of the borrower's customers and the borrower's ability to continue to generate new sales. A stylized theoretical model demonstrates that the value of a secured line-of-credit loan in minimizing contracting costs is associated with the borrower's business risk and the quality of the borrower's customers. Empirical tests on a sample of publicly traded U.S. manufacturing firms find that firms with secured line of credit loans are observably riskier and have fewer expected growth opportunities. Klapper's findings suggest that observably riskier borrowers can borrow more on a secured than on an unsecured basis. The results highlight the important role of secured letters of credit in providing liquidity to risky, credit-constrained firms that might not have access to external financing through other channels. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to study financing for small and medium-size enterprises. The author may be contacted at [email protected].
The Uniqueness Of Short Term Collateralization
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Author : Leora Klapper
language : en
Publisher:
Release Date : 2013
The Uniqueness Of Short Term Collateralization written by Leora Klapper and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
The author finds evidence that lines of credit secured by accounts receivable are associated with business borrowers with a high risk of default. While an unsecured short-term loan is repaid from the borrower's future cash flow, a loan secured by accounts receivable (a unique form of "inside" collateral) is repaid from previously generated and observed sales (the borrower's trade credit terms to its customers). Consequently, lenders that secure accounts receivable are most concerned with the credit risk of the borrower's customers and the borrower's ability to continue to generate new sales. A stylized theoretical model demonstrates that the value of a secured line-of-credit loan in minimizing contracting costs is associated with the borrower's business risk and the quality of the borrower's customers. Empirical tests on a sample of publicly traded U.S. manufacturing firms find that firms with secured line of credit loans are observably riskier and have fewer expected growth opportunities. The author's findings suggest that observably riskier borrowers can borrow more on a secured than on an unsecured basis. The results highlight the important role of secured letters of credit in providing liquidity to risky, credit-constrained firms that might not have access to external financing through other channels.
The Uniqueness Of Short Term Collateralization
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Author : Leora F. Klapper
language : en
Publisher:
Release Date : 2005
The Uniqueness Of Short Term Collateralization written by Leora F. Klapper and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.
A secured letter-of-credit loan allows a lender to make larger loans than would be permissible on an unsecured basis, maximizing a risky borrower's investment capital. Empirical evidence shows that secured letters of credit are used by borrowers who are informationally opaque and have higher observable risk. Such borrowers also have fewer growth opportunities and are less likely to pay dividends.Klapper finds evidence that lines of credit secured by accounts receivable are associated with business borrowers with a high risk of default. While an unsecured short-term loan is repaid from the borrower's future cash flow, a loan secured by accounts receivable (a unique form of quot;insidequot; collateral) is repaid from previously generated and observed sales (the borrower's trade credit terms to its customers). Consequently, lenders that secure accounts receivable are most concerned with the credit risk of the borrower's customers and the borrower's ability to continue to generate new sales.A stylized theoretical model demonstrates that the value of a secured line-of-credit loan in minimizing contracting costs is associated with the borrower's business risk and the quality of the borrower's customers. Empirical tests on a sample of publicly traded U.S. manufacturing firms find that firms with secured line of credit loans are observably riskier and have fewer expected growth opportunities.Klapper's findings suggest that observably riskier borrowers can borrow more on a secured than on an unsecured basis. The results highlight the important role of secured letters of credit in providing liquidity to risky, credit-constrained firms that might not have access to external financing through other channels.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study financing for small and medium-size enterprises. The author may be contacted at [email protected].
Pledged Collateral Market S Role In Transmission To Short Term Market Rates
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Author : Mr.Manmohan Singh
language : en
Publisher: International Monetary Fund
Release Date : 2019-05-17
Pledged Collateral Market S Role In Transmission To Short Term Market Rates written by Mr.Manmohan Singh and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-17 with Business & Economics categories.
In global financial centers, short-term market rates are effectively determined in the pledged collateral market, where banks and other financial institutions exchange collateral (such as bonds and equities) for money. Furthermore, the use of long-dated securities as collateral for short tenors—or example, in securities-lending and repo markets, and prime brokerage funding—impacts the risk premia (or moneyness) along the yield curve. In this paper, we deploy a methodology to show that transactions using long dated collateral also affect short-term market rates. Our results suggest that the unwind of central bank balance sheets will likely strengthen the monetary policy transmission, as dealer balance-sheet space is now relatively less constrained, with a rebound in collateral reuse.
Pledged Collateral Market S Role In Transmission To Short Term Market Rates
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FREE 30 Days
Author : Mr.Manmohan Singh
language : en
Publisher: International Monetary Fund
Release Date : 2019-05-17
Pledged Collateral Market S Role In Transmission To Short Term Market Rates written by Mr.Manmohan Singh and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-17 with Business & Economics categories.
In global financial centers, short-term market rates are effectively determined in the pledged collateral market, where banks and other financial institutions exchange collateral (such as bonds and equities) for money. Furthermore, the use of long-dated securities as collateral for short tenors—or example, in securities-lending and repo markets, and prime brokerage funding—impacts the risk premia (or moneyness) along the yield curve. In this paper, we deploy a methodology to show that transactions using long dated collateral also affect short-term market rates. Our results suggest that the unwind of central bank balance sheets will likely strengthen the monetary policy transmission, as dealer balance-sheet space is now relatively less constrained, with a rebound in collateral reuse.
Financing The Future
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Author : Marianne Fay
language : en
Publisher: World Bank Publications
Release Date : 2001
Financing The Future written by Marianne Fay and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Infrastructure (Economics) categories.
A model developed to predict demand for infrastructure in Latin America performs reasonably well for power and telecommunications, and less well for water and sanitation (for which data are scarce) and transport infrastructure (which is less closely related to per capita income). The model projects a doubling of telephone mainlines per capita, a steady increase in power infrastructure, steady growth in road infrastructure, and small increases in water and sanitation coverage. To assess five-year demand for infrastructure investment in Latin America and the Caribbean, and the private sector's role in meeting this demand, Fay developed a model to predict future demand for infrastructure, defined as what consumers and producers would ask for, given their income and level of economic activity.
Advanced Modelling In Mathematical Finance
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Author : Jan Kallsen
language : en
Publisher: Springer
Release Date : 2016-12-01
Advanced Modelling In Mathematical Finance written by Jan Kallsen and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-12-01 with Mathematics categories.
This Festschrift resulted from a workshop on “Advanced Modelling in Mathematical Finance” held in honour of Ernst Eberlein’s 70th birthday, from 20 to 22 May 2015 in Kiel, Germany. It includes contributions by several invited speakers at the workshop, including several of Ernst Eberlein’s long-standing collaborators and former students. Advanced mathematical techniques play an ever-increasing role in modern quantitative finance. Written by leading experts from academia and financial practice, this book offers state-of-the-art papers on the application of jump processes in mathematical finance, on term-structure modelling, and on statistical aspects of financial modelling. It is aimed at graduate students and researchers interested in mathematical finance, as well as practitioners wishing to learn about the latest developments.
A Dictionary Of Medical Terminology Dental Surgery And The Collateral Sciences
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Author : Chapin Aaron Harris
language : en
Publisher:
Release Date : 1855
A Dictionary Of Medical Terminology Dental Surgery And The Collateral Sciences written by Chapin Aaron Harris and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1855 with Dentistry categories.
The Maze Of Banking
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Author : Gary B. Gorton
language : en
Publisher: Oxford University Press, USA
Release Date : 2015
The Maze Of Banking written by Gary B. Gorton and has been published by Oxford University Press, USA this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with Business & Economics categories.
Financial crises are devastating in human and economic terms. To avoid the next one, it is important to understand the recent financial crisis of 2007-2008 and the financial eras which preceded it. Gary Gorton has been studying financial crises since his 1983 PhD thesis, "Banking Panics."The Maze of Banking contains a collection of his academic papers on the subjects of banks, banking, and financial crises. The papers in this volume span almost 175 years of U.S. banking history, from pre-U.S. Civil War private bank notes issued during the U.S. Free Banking Era (1837-1863); followed by the U.S. National Banking Era (1863-1914) before there was a central bank; through loan sales, securitization, and the financial crisis of 2007-2008. Banking changed profoundly during these 175 years, yet it did not change in fundamental ways. The forms of money changed, resulting in associated changes in the information structure of the economy. Bank debt evolved as an instrument for storing value, smoothing consumption, and transactions, but its fundamental nature did not change. In all its forms, it is vulnerable to bank runs without government intervention. These papers provide the framework for understanding how the financial crisis of 2007-2008 developed and what can be done to promote a stabile banking industry and prevent future economic crises.