How collateral laws shape lending and sectoral activity

Charles W. Calomiris, Mauricio Larrain*, José Liberti, Jason Sturgess

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

28 Scopus citations


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 data set 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 toward 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 and investment. An analysis of Slovakia's collateral law reform confirms our findings.

Original languageEnglish (US)
Pages (from-to)163-188
Number of pages26
JournalJournal of Financial Economics
Issue number1
StatePublished - Jan 1 2017


  • Collateral laws
  • Creditor rights
  • Immovable collateral
  • Loan-to-value ratios
  • Movable collateral

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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