NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Collateral Laws Shape Lending and Sectoral Activity

Charles W. Calomiris, Mauricio Larrain, José M. Liberti, Jason D. Sturgess

NBER Working Paper No. 21911
Issued in January 2016
NBER Program(s):Corporate Finance

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.

download in pdf format
   (590 K)

email paper

Supplementary materials for this paper:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21911

Published: 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. citation courtesy of

Users who downloaded this paper also downloaded* these:
Blau and Kahn w21913 The Gender Wage Gap: Extent, Trends, and Explanations
Gorton and Tallman w22036 How Did Pre-Fed Banking Panics End?
Campello and Larrain w21690 Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity
Lin, Morck, Yeung, and Zhao w22001 Anti-Corruption Reforms and Shareholder Valuations: Event Study Evidence from China
He and Milbradt w21919 Dynamic Debt Maturity
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us