EconPapers    
Economics at your fingertips  
 

Movables as collateral and corporate credit: Loan-level evidence from legal reforms across Europe

Steven Ongena, Walid Saffar, Yuan Sun and Lai Wei

Journal of Banking & Finance, 2025, vol. 170, issue C

Abstract: Does pledging movables as collateral alter corporate borrowing? To answer this question, we study the effect of collateral law reforms on syndicated bank loans granted across nine European countries that facilitated pledging movables between 1995 and 2019, comparing them to 19 countries that did not. We differentiate firms in sectors of higher versus lower asset movability to strengthen the identification. We find that although the reforms have enabled firms in movable-intensive sectors to issue more secured loans, the average cost of the loans and the number of covenants have also increased. Channel tests suggest that banks may demand more to compensate for the potential wealth redistribution induced by newly issued secured credit, or the unique risk involved with using movables as collateral.

Keywords: Cost of debt; Collateral laws; Access to credit; Inclusive Finance (search for similar items in EconPapers)
JEL-codes: G20 G30 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426624002450
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Movables as Collateral and Corporate Credit: Loan-Level Evidence from Legal Reforms across Europe (2022) Downloads
Working Paper: Movables as Collateral and Corporate Credit: Loan-Level Evidence from Legal Reforms across Europe (2022) Downloads
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:eee:jbfina:v:170:y:2025:i:c:s0378426624002450

DOI: 10.1016/j.jbankfin.2024.107331

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-06-09
Handle: RePEc:eee:jbfina:v:170:y:2025:i:c:s0378426624002450