In finance, collateral is a borrower's commitment of property to a lender as a means to secure against counterparty risk and ensure repayment of a loan.

Overcollateralization is used to define types of loan products 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.

See also DeFi.


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  2. Ball, Laurence M. The Fed and Lehman Brothers: setting the record straight on a financial disaster. Cambridge University Press, 2018.