Where does collateral collide?

An asset a borrower pledges to a lender to secure a loan, which the lender may seize and sell if the borrower defaults: because it can be taken, it lowers the lender's loss and shapes how much credit is offered and on what terms. Kiyotaki and Moore's 1997 Credit cycles modelled how the value of borrowers' collateral and the loans it supports reinforce one another, so a fall in asset prices tightens borrowing and deepens a downturn, the mechanism now called the collateral channel. The referent is a claim on property backing a financial obligation, valued in money and reduced by a haircut, not a branch of a nerve fibre, a spare route for blood, or unintended harm in war.[1]

Unit

A pledged asset backing one loan, valued in money less a haircut

Recovery means

On default the lender recovers value by seizing and selling the pledged asset

Measured by

Assessed by its market value, the loan-to-value ratio, and the haircut applied by the lender

A secondary blood vessel or network that provides an alternative route for flow around a narrowed or blocked artery, enlarging over time to keep tissue supplied when the main channel fails. Seiler, Stoller, Pitt, and Meier's 2013 review of the human coronary collateral circulation described how these pre-existing connections grow and how a well developed collateral supply protects the heart during coronary disease. The referent is a bypass pathway in the body's vasculature, graded by how much flow it carries relative to the blocked vessel, not a pledged asset, a branch of a single nerve fibre, or unintended harm in war.[2]

Unit

An alternative vascular route around one blocked or narrowed vessel

Recovery means

The pathway enlarges over weeks as flow is redirected, restoring supply to tissue at risk

Measured by

Graded by angiography and by the collateral flow index, the fraction of normal flow it maintains

The unintended death, injury, or destruction inflicted on civilians and civilian property while striking a legitimate military target: the harm is foreseen but not the aim, and it is judged by whether it is proportionate to the military advantage sought. Walzer's 1977 Just and unjust wars analysed such harm through the doctrine of double effect and argued that soldiers must actively limit the risk they impose on non-combatants, not merely refrain from targeting them. The referent is incidental harm to protected people in armed conflict, weighed against military necessity, not an asset pledged for a loan, a branch of a nerve fibre, or a spare route for blood.[3]

Unit

Incidental civilian harm from one attack on a military target

Recovery means

Not applicable

Measured by

Weighed before and after a strike against the military advantage sought, under the rule of proportionality