We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Robbing the Bank: Non-recourse Lending and Asset Prices.
- Authors
Pavlov, Andrey; Wachter, Susan
- Abstract
Authors in this article investigate the market prices of assets in fixed supply whose purchase is typically financed through non-recourse loans. The largest and most common asset in this category is real estate. Authors demonstrate two features of such markets, first, lenders' underpricing of the put option in non-recourse loans leads to inflated asset prices within efficient markets, and second, lenders with short-term horizons have incentives to underprice the put option. The results hold when participants in both equity and debt markets are rational.
- Subjects
ASSETS (Accounting); MARKET prices; LOANS; REAL property; MONEYLENDERS; OPTIONS (Finance); DEBT
- Publication
Journal of Real Estate Finance & Economics, 2004, Vol 28, Issue 2/3, p147
- ISSN
0895-5638
- Publication type
Article
- DOI
10.1023/B:REAL.0000011151.02848.1a