Elgar Financial Law series
Edited by Frederique Dahan and John Simpson
Chapter 11: Challenges in Implementing Secured Transactions Reform in Latin America
Nuria de la Peña* The lack of an eﬀective framework for secured transactions in Latin America substantially limits its economic growth, as has been well emphasized in the preceding chapters. Legal restrictions on the use of collateral, moreover, reinforce the inequality in the distribution of wealth. The laws and institutions that support the use of collateral work well only for owners of real estate who have clear title to their land. Wealthy landowners have better access to credit, enabling them to add more easily to their wealth. This defective system of collateral most hurts those who are already disadvantaged – indigenous people, women and the disabled – the groups most heavily represented among the landless and holders of untitled land. A major problem is the lack of an eﬀective framework for using movable property as collateral for loans. Only new motor vehicles and titled urban real estate are readily accepted as collateral. Yet new motor vehicles represent less than 0.5 percent of the capital stock. Micro, small and mediumsize enterprises typically have 95 percent of their assets in movable property * The arguments set out in this chapter were ﬁrst presented at the International Conference on Collateral Reform and Access to Credit, London, August 2006, sponsored by the EBRD and the World Bank. The views expressed in this chapter are solely the author’s and do not represent the views or opinions of CEAL or the governments, institutions or countries it represents. The author thanks her associates Fernando Cantuarias, Heywood Fleisig,...
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