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Post by Sapphire Capital on Jul 11, 2008 6:46:46 GMT 4
Collateral and Adverse Selection in Transition Countries LAURENT WEILL Université Robert Schuman Strasbourg III CHRISTOPHE J. GODLEWSKI University of Strasbourg I (ULP) - Faculty of Economics and Business -------------------------------------------------------------------------------- 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. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1126394_code347791.pdf?abstractid=1126394&mirid=2
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