Loan collateralization: Some historical evidence

Abstract

The importance of collateral as a security for loan as well advances in both the formal and informal sectors of the economy cannot be over emphasized. It is against this backdrop that the paper attempted a theoretical review of loan collateralization with historical evidence. The paper argued that the use of humans as security pawns were prominent in the medieval era. In Nigeria, for instance, bonded labour or debt slavery was common among different ethnic groups and, was enshrined in the customary laws. The modern approach to credit  administration captured in the 5 Cs of lending are equally x-rayed. The paper concludes that modern economy is money-driven and consequently a replacement for the barter system of exchange.