Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/176056 
Year of Publication: 
2010
Series/Report no.: 
Texto para discussão No. 573
Publisher: 
Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia, Rio de Janeiro
Abstract: 
In 2004, Brazil provided an interesting natural experiment concerning personal credit. A new law was enacted allowing banks to offer loans with repayment through automatic payroll or social security benefit deduction, thus removing a significant part of the moral hazard problem by eliminating the choice of default when debtors are able to pay their loans out of their wages. We estimate the impact of the new law using car loans as a control group. We find that, at the industry level, the new law has caused a reduction in interest rates and an increase in the volume of personal credit.
Subjects: 
Credit markets
collateral
difference-in-differences. JEL Code: G21
D01
C33
K00
E44.
JEL: 
G21
D01
C33
K00
E44
Document Type: 
Working Paper

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