Article
Equilibrium with limited-recourse collateralized loans
Economic Theory
(2013)
Abstract
We address a general equilibrium model with limited-recourse collateralized loans and securitization of debts. Each borrower is required to pledge physical collateral, and bankruptcy is filed against him if claims are not fully honored. Moreover, agents have a positive amount of wealth exempt from garnishment and, for at least a fraction of them, commodities used as collateral are desirable. In this context, equilibrium exists for any continuous garnishment rule and multiple types of reimbursement mechanisms.
Keywords
- Collateralized assets,
- bankruptcy,
- limited recourse collateralized loans,
- equilibrium existence
Disciplines
Publication Date
2013
Citation Information
Poblete-Cazenave, R. and J. P. Torres-Martínez ( 2013): "Equilibrium with limited-recourse collateralized loans," Economic Theory, volume 53, pages 181-211.