Repossession and the democratization of credit

Juliano J. Assunção, Efraim Benmelech*, Fernando S.S. Silva

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


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 reform expanded credit to riskier, self-employed borrowers who purchased newer, more expensive cars. The legal change has led to larger loans with lower spreads and longer maturities. 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 and highlight the crucial role that collateral and repossession play in the liberalization and democratization of credit.

Original languageEnglish (US)
Pages (from-to)2661-2689
Number of pages29
JournalReview of Financial Studies
Issue number9
StatePublished - Sep 2014

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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