The uniqueness of short-term collateralization

A secured letter-of-credit loan allows a lender to make larger loans than would be permissible on an unsecured basis, maximizing a risky borrower's investment capital. Empirical evidence shows that secured letters of credit are used by borrowers who are informationally opaque and have higher ob...

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Bibliographic Details
Main Author: Klapper, Leora
Corporate Author: World Bank Development Research Group
Format: eBook
Language:English
Published: Washington, D.C World Bank, Development Research Group, Finance 2001
Series:Policy research working paper
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
Description
Summary:A secured letter-of-credit loan allows a lender to make larger loans than would be permissible on an unsecured basis, maximizing a risky borrower's investment capital. Empirical evidence shows that secured letters of credit are used by borrowers who are informationally opaque and have higher observable risk. Such borrowers also have fewer growth opportunities and are less likely to pay dividends
Item Description:"February 2001"--Cover. - Includes bibliographical references (p. 32-33). - Title from title screen as viewed on Sept. 18, 2002