Repossession and the Democratization of Credit

Juliano Assuncao, Efraim Benmelech and Fernando S. S. Silva

No 17858, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 change has led to larger loans with lower spreads and longer maturities. The reform expanded credit to riskier, low-income borrowers for newer, more expensive cars. 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, highlighting the crucial role that collateral and repossession play in the liberalization and democratization of credit.

JEL-codes: G21 G28 K22 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-ban and nep-cfn
Note: CF LE ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Benmelech, Efraim, Juliano Assuncao and Fernando S. S. Silva. Forthcoming. Repossession and the Democratization of Credit. Review of Financial Studies.

Downloads: (external link)
http://www.nber.org/papers/w17858.pdf (application/pdf)

Related works:
Journal Article: Repossession and the Democratization of Credit (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:17858

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w17858

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().