Collateral and Adverse Selection in Transition Countries

31 Pages Posted: 29 Apr 2008  

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)

Christophe J. Godlewski

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie); EM Strasbourg Business School; Université de Haute Alsace - FSESJ

Date Written: 2008

Abstract

This paper tackles the question of knowing whether collateral helps solve adverse selection problems in transition countries. We use a unique dataset of about 400 bank loans from 16 transition countries. Our findings support the view of a positive link between the presence of collateral and the risk premium, which is in accordance with the observed-risk hypothesis. This suggests that collateral does not mitigate adverse selection problems in transition countries.

Keywords: Bank, collateral, transition economies

JEL Classification: G21, P20

Suggested Citation

Weill, Laurent and Godlewski, Christophe J., Collateral and Adverse Selection in Transition Countries (2008). Available at SSRN: https://ssrn.com/abstract=1126394 or http://dx.doi.org/10.2139/ssrn.1126394

Laurent Weill (Contact Author)

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie) ( email )

61 Avenue de la Forêt Noire
F-67085 Strasbourg Cedex
France

Christophe J. Godlewski

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie) ( email )

61 Avenue de la Forêt Noire
Strasbourg, 67085
France

HOME PAGE: http://ifs.u-strasbg.fr/large

EM Strasbourg Business School ( email )

61 Avenue de la Forêt Noire
Strasbourg, 67085
France

HOME PAGE: http://www.em-strasbourg.eu/

Université de Haute Alsace - FSESJ ( email )

16 rue de la Fonderie
Mulhouse, 68093
France

HOME PAGE: http://www.campus-fonderie.uha.fr/

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