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Did specialised courts affect the frequency of business bankruptcy petitions in Spain?

Author

Listed:
  • Claudio Detotto

    (LISA - Lieux, Identités, eSpaces, Activités - UPP - Université Pascal Paoli - CNRS - Centre National de la Recherche Scientifique)

  • Laura Serra

    (UPF - Universitat Pompeu Fabra [Barcelona])

  • Marco Vannini

    (UNISS - Università degli Studi di Sassari = University of Sassari [Sassari])

Abstract
Spanish small businesses rarely file for bankruptcy, and Spanish bankruptcy rates are abnormally small. The historical inadequacy of the Spanish insolvency system has led most enterprises to rely on the de facto alternative mortgage system and to overinvest in fixed tangible assets: a distortion that may trigger significant adverse effects, for instance on the enabling environment of novel entrepreneurship. The reform of the bankruptcy law that took place in Spain some 10 years in order to modernise the insolvency system involved, as a main novelty, the establishment of specialised commercial courts (Juzgados de lo Mercantil). Since the net benefits of specialised judicial functions are in principle ambiguous, we study empirically whether these new bodies had any impact, over and above the economic crisis, on the use of the bankruptcy system. Exploiting the staggered timing of the new courts geography, we estimate an endogenous treatment model with a binary policy variable which allows to measure the effect of the reform on bankruptcy rates. The results support the view that the new bankruptcy law took the right path, but the size of the estimated parameters call for further policy efforts in that direction.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Claudio Detotto & Laura Serra & Marco Vannini, 2019. "Did specialised courts affect the frequency of business bankruptcy petitions in Spain?," Post-Print hal-01974508, HAL.
    • Handle: RePEc:hal:journl:hal-01974508
    DOI: 10.1007/s10657-018-9601-z
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    Cited by:

    1. Laura Serra & Claudio Detotto & Pablo Juan & Marco Vannini, 2022. "Intersectoral and spatial spill-overs of firms’ bankruptcy in Spain," Letters in Spatial and Resource Sciences, Springer, vol. 15(2), pages 197-211, August.
    2. Giuseppe Arcuri & Nadine Levratto & Marianna Succurro, 2023. "Does commercial court organisation affect firms’ bankruptcy rate? evidence from the french judicial reform," European Journal of Law and Economics, Springer, vol. 55(3), pages 573-601, June.
    3. Ewelina Mruk & Inmaculada Aguiar-Díaz & Maria Victoria Ruiz-Mallorquí, 2019. "Use of formal insolvency procedure and judicial efficiency in Spain," European Journal of Law and Economics, Springer, vol. 47(3), pages 435-470, June.

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    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K2 - Law and Economics - - Regulation and Business Law

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