Download or read book The Uniqueness of Short-term Collateralization written by Leora Klapper and published by World Bank Publications. This book was released on 2001 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: A secured letter-of-credit loan allows a lender to make larger loans than would be permissible on an unsecured basis, maximizing a risky borrower's investment capital. Empirical evidence shows that secured letters of credit are used by borrowers who are informationally opaque and have higher observable risk. Such borrowers also have fewer growth opportunities and are less likely to pay dividends.