Destroying Collateral: Asset Security and the Financing of Firms

ISI: Destroying Collateral: Asset Security and the Financing of Firms


2015 - Applied Economics Letters - Vol. 22, Issue 9, Pp. 704 - 709


Posting collateral encourages credit provision under the assumption that lenders can appropriate the pledged assets in case of default. When institutions work imperfectly, though, banks discount the value of eective collateral, thereby reducing lending volume. This process has been described in U.S. states with dicult foreclosure procedures, but here we show that it also matters for poor countries after a violent conict, when collateralizable assets have a heightened probability of being destroyed. We use rm-level data on loans in Sub-Saharan Africa to show that to get a loan, rms in countries with recent conict need to pledge additional collateral. While some OLS oer supporting evidence, the eect is larger and more precisely estimated when we use quantile regressions to focus on the subgroup of rms that face tougher collateral requirements, which suggests that this eect is heterogeneous within countries. This mechanism is a novel channel that relates peace to economic growth and convergence through nancial markets


Mortgage, political risk, pledge-ability, social conict, economic recovery, peace dividend.

¿Quieres seguir leyendo? [Accede a la publicación completa]

Profesor Pedro Leiva expuso en el Seminario SUSESO-ISTAS 21

El pasado 19 de abril, el Director del Observatorio de Gestión de Personas de la Facultad de Economía y Negocios de la Universidad de Chile, Profesor Pedro Leiva participó como...

Profesora Soledad Etchebarne participo en Seminario de Educación Financiera en Jóvenes Chilenos: Evidencia y Desafíos.

El pasado 14 de marzo de 2018, se llevo a cabo en el auditorio del Banco Central el Seminario de “Educación Financiera en Jóvenes Chilenos: Evidencia y Desafíos”. E...

Todos los Derechos © 2014 | Departamento de Administración - Facultad de Economía y Negocios - Universidad de Chile - Diagonal Paraguay 257, torre 26, oficina 1101, piso 11, Santiago, Chile.