Collateral Damage: Gender Stratification and Secured Transaction Reform in Latin American Credit Markets

• In Event: Law and Political Economy

Abstract

How do legal reforms designed to expand financial inclusion reshape who gets credit and who does not? This paper examines the gendered consequences of secured transaction reform for entrepreneurs in Latin America. Promoted as a pathway to broader market access, these reforms expand eligible collateral to include movable assets like inventory, equipment, and accounts receivable. Because women entrepreneurs disproportionately hold movable rather than fixed assets, these reforms should, in theory, reduce gendered barriers to credit. Whether they do remains an open empirical question, particularly given that collateral law does not merely regulate existing credit markets but shapes their fundamental terms of access and exclusion.
Credit markets operate as a sequence of organizational filters, and gender can matter differently at each one. Women may self-select out of borrowing in anticipation of rejection. Those who apply may face stricter requirements or higher rates of denial. A reform that shifts outcomes at one stage may leave others untouched. I trace who applies and who does not, whether applicants face collateral requirements, and what happens to those ultimately denied.
I construct the analytic sample through a systematic review of national legislation across 20 Latin American countries, identifying those that adopted standardized secured transaction laws and where those laws were operational. Countries with partial or non-operational reforms are excluded to preserve the counterfactual, yielding 6 treatment and 5 control countries. Using firm-level World Bank Enterprise Survey data and a difference-in-differences design that exploits staggered reform adoption, I estimate gendered effects at each stage, distinguishing between women who own firms and those who manage them.
This paper provides the first causal evidence on whether secured transaction reforms reduce gender gaps in entrepreneurial credit and identifies where in the lending process gaps persist, shift, or close.

Author

• Majo Ágreda, Cornell University