Repossession and the Democratization of Credit

• 成果类型: Article
• 署名作者: Assuncao, Juliano J.; Benmelech, Efraim; Silva, Fernando S. S.
• 署名单位: Pontificia Universidade Catolica do Rio de Janeiro; Northwestern University; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht080
• 发表日期: 2014
• 页码: 2661
• 关键词: imperfect information; FINANCIAL CONTRACTS; liquidation values; DEBT CAPACITY; bank loans; MARKETS; default; RISK; RENEGOTIATION; equilibrium

摘要

We exploit a 2004 credit reform in Brazil that simplified the sale of repossessed cars used as collateral for auto loans. We show that the reform expanded credit to riskier, self-employed borrowers who purchased newer, more expensive cars. The legal change has led to larger loans with lower spreads and longer maturities. Although the credit reform improved riskier borrowers' access to credit, it also led to increased incidences of delinquency and default. Our results shed light on the consequences of a credit reform and highlight the crucial role that collateral and repossession play in the liberalization and democratization of credit. (JEL G32, G33, K12, K40)