Citizens vs. banks: institutional drivers of financial market litigiousness in Brazil

• Autor(a) principal: Salama, Bruno Meyerhof
• Data de Publicação: 2013
• Outros Autores: Pinheiro, Thiago Jabor
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: http://hdl.handle.net/10438/11192
• topic: Litigation; Institutions; Credit markets; Courts; Regulation; Direito; Mercado financeiro - Brasil

This article analyzes the institutional drivers of Brazil’s alarmingly high levels of litigation between clients and financial institutions. Most of the policy oriented literature that explores that phenomenon discusses the impacts of a perceived debtor-friendly bias of Brazilian courts on generating feedback loops of litigation that further increases interest rates and creates adverse selection within the pool of potential debtors. This literature therefore addresses the way courts behave once disputes reach their doorstep; conversely, we take a step back to understand the underlying reasons for why such a large number of disputes end up in courts in the first place. We accordingly attribute endemic litigation in Brazilian financial markets to a framework of political, economic and legal institutions and circumstances, which this article aims to unbound and explain.