Impacto da Lei de Crédito Consignado nos diferentes Tipos de Crédito para Pessoa Física / Impact of the Payroll Credit Law on the different Types of Credit for Individuals

This study examined the impact of the new Law of Payroll loan (Law 10 820) on free loans to individuals. We used data from a large bank with operations throughout the Brazilian territory related to the balances of loans and portfolios of bad credit for individuals. The results are in line with the theory that an increase in creditor protection through the discount in payroll reduces moral hazard and induce lenders to offer credit on better terms, resulting in benefit to the borrowers. It was noted a significant increase in loan balances to individuals and credit migration from other portfolios because they are substitutes. The effect of the law in the credit default was considered statistically insignificant while in the Credit Direct to the Consumer (CDC) was increased in default which is justified by the effect of adverse selection, i.e., the migration of good borrowers for the payroll loan.