Over-indebtedness in Brazil: Do We Need More Regulation?
Abstract: During the last decade, many Brazilian consumers left the lower strata of the socioeconomic pyramid and ascended to the middle class. A large part this increased social mobility came from increased access to credit. Although borrowing led to a higher social status for some, for others it led to over-indebtedness. This paper takes a law and economics approach to analyze over-indebtedness in Brazil and discusses the necessity of wider regulation of consumer credit. It first investigates the available institutions in the Brazilian model and then considers the necessity of further regulation. If regulation is needed, should it be ex ante prohibitions, ex post liability rules, or a mixture of both?
