Abstract

http://ssrn.com/abstract=2405092
 


 



Court Enforcement and Firm Productivity: Evidence from a Bankruptcy Reform in Brazil


Jacopo Ponticelli


University of Chicago - Booth School of Business

December 1, 2013

Chicago Booth Research Paper No. 14-08
Fama-Miller Working Paper

Abstract:     
Financial reform designed to improve creditor protection is often encouraged as a way to increase credit access for firms in developing countries. In this paper, I show that when court enforcement works poorly, financial reform is ineffective in fostering both credit access and the productivity of firms. In the empirical analysis, I exploit variation in the congestion of civil courts across Brazilian judicial districts at the outset of a bankruptcy reform. I find that, after the reform, firms operating in districts with less congested courts experienced higher access to bank loans and larger increase in investment and productivity than firms operating in districts with more congested courts. I propose an instrumental variable strategy to show that these results are not driven by district-level omitted variables.

Number of Pages in PDF File: 52

Keywords: Credit Constraints, Financial Reform, Manufacturing Firms

JEL Classification: G33, O16

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Date posted: March 7, 2014  

Suggested Citation

Ponticelli, Jacopo, Court Enforcement and Firm Productivity: Evidence from a Bankruptcy Reform in Brazil (December 1, 2013). Chicago Booth Research Paper No. 14-08; Fama-Miller Working Paper. Available at SSRN: http://ssrn.com/abstract=2405092 or http://dx.doi.org/10.2139/ssrn.2405092

Contact Information

Jacopo Ponticelli (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
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