IDEAS home Printed from https://ideas.repec.org/a/fgv/eaerae/v63y2023i3a89329.html

Collaterals of rural credit in Brazil: Access, loan terms, and default

Author

Listed:
  • Menezes, Alexandre Pinho
  • Schiozer, Rafael F.
  • Vasconcelos, Lucas N. C.

Abstract

This study investigates the relation between the types of collateral offered in rural loans in Brazil and the access to credit, loan conditions and default rates. We use a novel proprietary database of rural loans granted by one of the largest private banks in Brazil containing more than 110 thousand loan observations. Our results show that the use of fiduciary lien, improves the access to loans for more opaque borrowers (i.e., those with shorter relationship with the bank). This type of collateral gives the bank the ability to seize collateral quicker, reducing loss given default, even if these borrowers are riskier, given that they present higher default rates on average. Our results also show that loan conditions are less restrictive as relationship length increases, and that this effect is more intense among loans collateralized by fiduciary lien.

Suggested Citation

  • Menezes, Alexandre Pinho & Schiozer, Rafael F. & Vasconcelos, Lucas N. C., 2023. "Collaterals of rural credit in Brazil: Access, loan terms, and default," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 63(3), May.
    • Handle: RePEc:fgv:eaerae:v:63:y:2023:i:3:a:89329
    as

    Download full text from publisher

    File URL: https://periodicos.fgv.br/rae/article/view/89329
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fgv:eaerae:v:63:y:2023:i:3:a:89329. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Núcleo de Computação da FGV EPGE (email available below). General contact details of provider: https://edirc.repec.org/data/eagvfbr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.