How Collateral Laws Shape Lending and Sectoral Activity

Charles Calomiris, Mauricio Larrain, Jose Liberti and Jason Sturgess

No 21911, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We demonstrate the central importance of creditors’ ability to use “movable” assets as collateral (as distinct from “immovable” real estate) when borrowing from banks. Using a unique cross-country micro-level loan dataset containing loan-to-value ratios for different assets, we find that loan-to-values of loans collateralized with movable assets are lower in countries with weak collateral laws, relative to immovable assets, and that lending is biased towards the use of immovable assets. Using sector-level data, we find that weak movable collateral laws create distortions in the allocation of resources that favor immovable-based production. An analysis of Slovakia’s collateral law reform confirms our findings.

JEL-codes: G18 G21 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-ban and nep-law
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Published as Calomiris, Charles W. & Larrain, Mauricio & Liberti, José & Sturgess, Jason, 2017. "How collateral laws shape lending and sectoral activity," Journal of Financial Economics, Elsevier, vol. 123(1), pages 163-188.

Downloads: (external link)
http://www.nber.org/papers/w21911.pdf (application/pdf)

Related works:
Journal Article: How collateral laws shape lending and sectoral activity (2017)
Working Paper: How Collateral Laws Shape Lending and Sectoral Activity (2015)
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:21911

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w21911

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 ().