The Decline of Secured Debt / Efraim Benmelech, Nitish Kumar, Raghuram Rajan.

Format:

Book

Author/Creator:

Benmelech, Efraim.

Contributor:

National Bureau of Economic Research.

Kumar, Nitish.

Rajan, Raghuram.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26637.

NBER working paper series no. w26637

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

The share of secured debt issued (as a fraction of total corporate debt) declined steadily in the United States over the twentieth century. This stems partly from financial development giving creditors greater confidence that high quality borrowers will respect their claims even if creditors do not obtain security up front. Consequently, such borrowers prefer retaining financial flexibility by not giving security up front. Instead, security is given contingently - when a firm approaches distress. This also explains why superimposed on the secular decline, the share of secured debt issued is countercyclical.

Notes:

Print version record

January 2020.