NBER

Fernando S. Silva

Catholic University of Rio de Janeiro (PUC-Rio)
Rua Marquês de São Vicente, 225
22451-900 Rio de Janeiro, RJ
Brazil

E-Mail: fernandosssilva@yahoo.com.br
Institutional Affiliation: Catholic University of Rio de Janeiro (PUC-Rio)

NBER Working Papers and Publications

February 2012Repossession and the Democratization of Credit
with Juliano J. Assunção, Efraim Benmelech: w17858
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.

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

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