Download this Paper Open PDF in Browser

Citizens vs. Banks - Institutional Drivers of Financial Market Litigiousness in Brazil

45 Pages Posted: 4 Oct 2013 Last revised: 3 Apr 2017

Bruno M. Salama

Fundação Getulio Vargas Law School at São Paulo

Thiago Jabor Pinheiro

Independent

Date Written: August 2, 2013

Abstract

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.

Keywords: litigation, regulation, institutions, credit markets, courts

JEL Classification: K23

Suggested Citation

Salama, Bruno M. and Pinheiro, Thiago Jabor, Citizens vs. Banks - Institutional Drivers of Financial Market Litigiousness in Brazil (August 2, 2013). FGV Direito SP Research Paper Series No. 01. Available at SSRN: https://ssrn.com/abstract=2335116 or http://dx.doi.org/10.2139/ssrn.2335116

Bruno M. Salama (Contact Author)

Fundação Getulio Vargas Law School at São Paulo ( email )

R. Rocha, 233, Bela Vista
São Paulo, 01330-000
Brazil

Thiago Jabor Pinheiro

Independent ( email )

Paper statistics

Downloads
161
Rank
156,220
Abstract Views
625