Finance Webinar（2020-11)

Topic: Collateral and Secured Debt

Speaker: Adriano A. Rampini, Duke University

Time: Wednesday, 17 June, 10:00-11:30 Beijing Time

Location: Microsoft Teams Online conference room

Abstract:

We distinguish between collateral and secured debt. Secured debt is explicitly collateralized, placing a lien on specific assets that the lender can recover in default. Unsecured debt is a claim on unencumbered assets and thus implicitly collateralized. Tangible assets serve as collateral restricting both secured and unsecured debt. The explicit collateralization of secured debt entails costs but enables higher leverage. As a result financially constrained firms use more secured debt both across firms and within-firm over time. Our dynamic model is consistent with the strong positive relation between secured debt and measures of financial constraints and between leverage and tangible assets.

Introduction:

Adriano Rampini is the William and Sue Gross Professor of Financial Economics and a Professor of Finance and Economics at Duke University and currently on sabbatical at Princeton University and NYU. He received his Ph.D. in Economics from the University of Chicago and previously taught at Northwestern University. Professor Rampini’s expertise is in financial economics and macroeconomics, and he is known for his work on capital reallocation, leasing, collateral, and risk management, which is published in top economics and finance journals including the American Economic Review, Review of Economic Studies, and Journal of Finance. He is the President of FARFE, a past President of FTG, and a Director of FIRS. He is an NBER Research Associate and CEPR Research Fellow.

Your participation is warmly welcomed!