Liquidity, Pledgeability, and the Nature of Lending

Diamond and Rajan thank the Center for Research in Security Prices at Chicago Booth for research support. Rajan also thanks the Fama-Miller Center, the Stigler Center and IGM at Chicago Booth for research support. We are grateful for helpful comments from Ron Kaniel (the editor), the anonymous referee, Jason Roderick Donaldson, Ye Li, Arvind Krishnamurthy, S. ”Vish” Viswanathan, Ming Yang, and conference /seminar participants at the 2019 AEA, FIFI, Chicago Booth, Columbia, SFS Cavalcade, FIRS, Rochester, and IMF. This incorporates some results from a working paper, "Liquidity and Securitization." The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.