Reforming Collateral Laws To Expand Access To Finance

  • Date Published 16/05/2019
Reforming Collateral Laws To Expand Access To Finance
Reforming Collateral Laws To Expand Access To Finance

Most readers, especially those with car loans or home mortgages, know about collateral--property that the lender can take away from the borrower in the event that the borrower defaults. In low/middle income countries, it is understood that conservative lenders exclude firms from credit markets with their excessive collateral requirements. Usually, this is because only some property is acceptable as collateral: large holdings of urban real estate and, sometimes, new motor vehicles. Microenterprises, SMEs, and the poor have little of this property but they do have an array of productive assets that could easily be harnessed to serve as collateral. It is only the legal framework which prevents firms from using these assets to secure loans. In countries with reformed laws governing collateral, property such as equipment, inventory, accounts receivable, livestock are considered excellent collateral. This book aims to better equip project managers to implement reforms to the legal and institutional framework for collateral (secured transactions). It discusses the importance of movable property as a source of collateral for firms, the relationship between the legal framework governing movable assets and the financial sector consequences for firms (better loan terms, increased access, more competitive financial sector), and how reforms can be put in place to change the lending environment.

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Book Chapters

  • Preliminary PagesPreliminary Pages
  • Chapter 1Why Collateral Matters
  • Chapter 2How Collateral Reform Can Support Other Important Reforms And Initiatives
  • Chapter 3The Economic Consequences Of Obsolete Systems For Secured Transactions
  • Chapter 4Determining The Content Of The Reform
  • Chapter 5Implementing The Reform
  • Chapter 6Monitoring And Evaluating The Reform
  • Chapter 7Appendices

Reforming Collateral Laws To Expand Access To Finance

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