10 lines
755 B
Markdown
10 lines
755 B
Markdown
# Collateralization
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In finance, collateral is a borrower's commitment of property to a lender as a means to secure against [counterparty risk](counterparty-risk.md) and ensure repayment of a loan.
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*Overcollateralization* is used to define types of [loan products](financial-asset.md) where an asset value used as collateral on a loan exceeds the loan value. This is sometimes used by borrowers to reduce credit risk for the creditor and enhance the loan's credit rating.
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See also [DeFi](defi.md).
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## References
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1. Roche, Cullen O. 2011. ‘Understanding the Modern Monetary System’. http://ssrn.com/paper=1905625.
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1. Ball, Laurence M. The Fed and Lehman Brothers: setting the record straight on a financial disaster. Cambridge University Press, 2018. |