1. Equilibrium with limited-recourse collateralized loans
- Author
-
Rubén Poblete-Cazenave and Juan Pablo Torres-Martínez
- Subjects
Secondary mortgage market ,Economics and Econometrics ,Collateralized loan obligation ,Actuarial science ,General equilibrium theory ,Collateral ,Bankruptcy ,Collateralized debt obligation ,jel:D52 ,Economics ,Context (language use) ,Securitization ,Collateralized assets ,Bankruptcy, Limited-recourse loans ,Equilibrium existence - Abstract
We address a general equilibrium model with limited-recourse collateralized loans and securitization of debts. Each borrower is required to pledge physical collateral, and bankruptcy is filed against him if claims are not fully honored. Moreover, agents have a positive amount of wealth exempt from garnishment and, for at least a fraction of them, commodities used as collateral are desirable. In this context, equilibrium exists for any continuous garnishment rule and multiple types of reimbursement mechanisms.
- Published
- 2010