FRIC/Finance Seminar with Adriano Rampini, Fuqua School of Business, Duke University

The Department of Finance and FRIC, Center for Financial Frictions, are proud to announce the upcoming online seminar with Adriano Rampini, Fuqua School of Business, Duke University.

Adriano Rampini will present: 

Collateral and Secured Debt

ABSTRACT
We distinguish between collateral and secured debt. Secured debt is explicitly collateralized, placing a lien on specific assets, which facilitates enforcement. Unsecured debt is a claim on unencumbered assets and thus implicitly collateralized. Tangible assets serve as collateral restricting both types of debt. The explicit collateralization of secured debt entails costs but enables higher leverage. Therefore, financially constrained firms use more secured debt both across and within firms. Our dynamic model is consistent with stylized facts on the relation between secured debt and measures of financial constraints and between leverage and tangible assets, and with evidence from a causal forest.

Find the paper here.

Location and sign up:
This is an online seminar on Zoom.
Please contact us in order to sign up.