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The Brazilian Payroll Lending Experiment


  • Christiano A. Coelho


  • João M.P. De Mello

    (Departamento de Economia, PUC-Rio, and CNPq)

  • Bruno Funchal

    (FUCAPE Business School and CNPq)


In December 2003, the Brazilian Congress passed a law that led to a natural personal lending experiment. The law allows banks to offer loans with repayment through automatic payroll deduction, which, in effect, turns future income into collateral. We estimate the impact of the new law using auto loans as a control group. The law has caused a reduction in interest rates and an increase in the volume of personal credit. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Christiano A. Coelho & João M.P. De Mello & Bruno Funchal, 2012. "The Brazilian Payroll Lending Experiment," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 925-934, November.
  • Handle: RePEc:tpr:restat:v:94:y:2012:i:4:p:925-934

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    References listed on IDEAS

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    10. repec:hrv:faseco:30728041 is not listed on IDEAS
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    Cited by:

    1. Juliano J. Assunção & Efraim Benmelech & Fernando S. S. Silva, 2014. "Repossession and the Democratization of Credit," Review of Financial Studies, Society for Financial Studies, vol. 27(9), pages 2661-2689.
    2. International Monetary Fund & World Bank, 2013. "Financial Inclusion in Brazil : Building on Success," World Bank Other Operational Studies 16739, The World Bank.
    3. Marco Bonomo & Ricardo Brito & Bruno Martins, 2015. "Macroeconomic and Financial Consequences of the Post-Crisis Government-Driven Credit Expansion in Brazil," IDB Publications (Working Papers) 88337, Inter-American Development Bank.
    4. Aloisio Araujo & Bruno Funchal, 2015. "How Much Should Debtors be Punished in Case of Default?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 47(2), pages 229-245, April.
    5. Patrice Robitaille, 2011. "Liquidity and reserve requirements in Brazil," International Finance Discussion Papers 1021, Board of Governors of the Federal Reserve System (U.S.).
    6. Guilherme Lichand & Rodrigo R. Soares, 2014. "Access to Justice and Entrepreneurship: Evidence from Brazil's Special Civil Tribunals," Journal of Law and Economics, University of Chicago Press, vol. 57(2), pages 459-499.
    7. Marco Bonomo & Ricardo Brito & Bruno Martins, 2014. "Macroeconomic and Financial Consequences of the After Crisis Government-Driven Credit Expansion in Brazil," Working Papers Series 378, Central Bank of Brazil, Research Department.

    More about this item


    payroll; loans; credit markets; collateral; difference-in-differences; Brazil;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy


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