Fremont Financial Corporation (A)

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.

Case

Reference no. 9-294-098

Subject category: Finance, Accounting and Control

Authors: Erik Sirri (Harvard Business School); Ann Zeitung (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1994

Version: 4 March 1994

Length: 19 pages

Data source: Field research

Topics: Capital markets; Commercial credit; Small & medium-sized enterprises; Capital; Financial markets

Share a link: https://casecent.re/p/45487

| No reviews for this item

This product has not been used yet

View our pricing guide or login to see prices.

Abstract

Fremont Financial is an asset-based lender to middle-market companies. This case considers two options for Fremont to raise capital to finance its loan portfolio. Fremont can: 1) extend its existing bank line of credit, or 2) issue commercial paper through a special purpose conduit. The case emphasizes comprehension of Fremont's business as a non-bank lender and the manner by which these two financing choices address asymmetric information and moral hazard problems endemic to financial intermediation.

Location:

California

Industries:

Banking; Finance & insurance

Size:

100 employees, USD25 million revenues

Other setting(s):

1993