Collateral booms and information depletion
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- dc.contributor.author Asriyan, Vladimir
- dc.contributor.author Laeven, Luc
- dc.contributor.author Martín, Alberto
- dc.date.accessioned 2023-11-23T12:03:31Z
- dc.date.available 2023-11-23T12:03:31Z
- dc.date.issued 2022
- dc.description Includes replication files.
- dc.description.abstract We develop a new theory of information production during credit booms. Entrepreneurs need credit to undertake investment projects, some of which enable them to divert resources. Lenders can protect themselves from such diversion in two ways: collateralization, and costly screening that generates durable information about projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral values make it possible to reallocate resources towards productive projects, but they also crowd out screening. This has important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), economic activity expands but the economy’s stock of information on existing projects gets depleted. As a result, collateral-driven booms end in deep crises and slow recoveries: when booms end, investment is constrained both by the lack of collateral and by the lack of information on existing projects, which takes time to rebuild. We provide empirical support for the mechanism using US firm-level data.
- dc.format.mimetype application/pdf
- dc.identifier.citation Asriyan V, Laeven L, Martín A. Collateral booms and information depletion. Rev Econ Stud. 2022 Mar;89(2):517-55. DOI: 10.1093/restud/rdab046
- dc.identifier.doi http://dx.doi.org/10.1093/restud/rdab046
- dc.identifier.issn 0034-6527
- dc.identifier.uri http://hdl.handle.net/10230/58364
- dc.language.iso eng
- dc.publisher Oxford University Press
- dc.relation.ispartof The Review of Economic Studies. 2022 Mar;89(2):517-55
- dc.relation.isreferencedby http://dx.doi.org/10.5281/zenodo.4763138
- dc.rights © The Author(s) 2021. Published by Oxford University Press on behalf of The Review of Economic Studies Limited. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc/4.0/
- dc.subject.keyword Credit booms
- dc.subject.keyword Collateral
- dc.subject.keyword Information production
- dc.subject.keyword Crises
- dc.subject.keyword Bubbles
- dc.subject.keyword Misallocation
- dc.title Collateral booms and information depletion
- dc.type info:eu-repo/semantics/article
- dc.type.version info:eu-repo/semantics/publishedVersion