Product Market Competition and Collateralized Debt

31 Pages Posted: 16 Jul 2013

See all articles by Vittoria Cerasi

Vittoria Cerasi

Bicocca University - Department of Economics, Management & Statistics (DEMS)

Alessandro Fedele

Free University of Bozen-Bolzano - Faculty of Economics and Management

Raffaele Miniaci

University of Brescia - Department of Economics and Management

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2013

Abstract

This paper presents a model where bank credit depends upon borrowers’' product market structure. We show that a larger number of competitors in the industry may increase credit availability by enhancing the resale value of the collateralized productive assets. We also study how this benefi…t of competition is affected by the existence of outsiders willing to bid for the collateralized productive assets of the insiders. Our model encompasses the standard case of Cournot competition either when the default probability goes to zero or when there are multiple outsiders bidding for the productive assets. We test the empirical implications of the theoretical analysis exploiting information on the access to …finance of small and medium Italian fi…rms and fi…nd supportive evidence.

Keywords: collateralized loans, product market competition, productive assets resale value

JEL Classification: D22, L13, G33

Suggested Citation

Cerasi, Vittoria and Fedele, Alessandro and Miniaci, Raffaele, Product Market Competition and Collateralized Debt (March 1, 2013). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 238. Available at SSRN: https://ssrn.com/abstract=2294024 or http://dx.doi.org/10.2139/ssrn.2294024

Vittoria Cerasi (Contact Author)

Bicocca University - Department of Economics, Management & Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy
+39-02-64485821 (Phone)
+39-02-64485878 (Fax)

Alessandro Fedele

Free University of Bozen-Bolzano - Faculty of Economics and Management ( email )

Via Sernesi 1
39100 Bozen-Bolzano (BZ), Bozen 39100
Italy

Raffaele Miniaci

University of Brescia - Department of Economics and Management ( email )

Via San Faustino 74B
Brescia, 25122
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
50
Abstract Views
369
PlumX Metrics