We offer a new test of the ex ante theory of collateral. Theory states that lenders rely less on collateral if they have better information about borrowers. We test this by contrasting the use of collateral between formal and – better informed –...

Relationship banking involves the provision of financial services by an intermediary that a) invests in obtaining customer-specific information, often proprietary in nature; and b) evaluates the profitability of these investments through multiple...