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Collateral in Italy: a legal and economic analysis of privileges, pledges and mortgages

Author

Listed:
  • Elisa Brodi

    (Banca d'Italia)

Abstract

The work presents a legal and economic analysis of how collateral works in Italy. Specific attention is focused on privileges, pledges and mortgages, because of the prominent role they play in banking relationships. The paper highlights the critical issues in the current legislative framework and discusses some recent regulatory changes. It argues in favour of a simplification of privileges, reserving them for involuntary or unsophisticated creditors. At the same time, it analyses the rationale of the recent modernization of pledges, which, among other things, allows debtors to retain control over an asset and to use it within the production process. The new repossession mechanisms are an important alternative to judicial foreclosure for liquidating collateral. However, fine-tuning them, along with creating appropriate safeguards tailored for debtors in difficulty, would make them more effective.

Suggested Citation

  • Elisa Brodi, 2016. "Collateral in Italy: a legal and economic analysis of privileges, pledges and mortgages," Questioni di Economia e Finanza (Occasional Papers) 356, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_356_16
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2016-0356/QEF_356_16.pdf
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    References listed on IDEAS

    as
    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Safavian, Mehnaz & Sharma, Siddharth, 2007. "When do creditor rights work?," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 484-508, September.
    3. Jose M Garrido, 2016. "Insolvency and Enforcement Reforms in Italy," IMF Working Papers 2016/134, International Monetary Fund.
    4. Andra C. Ghent & Marianna Kudlyak, 2011. "Recourse and Residential Mortgage Default: Evidence from US States 1," The Review of Financial Studies, Society for Financial Studies, vol. 24(9), pages 3139-3186.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    collateral; banks; guarantees;
    All these keywords.

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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