References (44)


Citations (41)



How Law Affects Lending

Rainer F. H. Haselmann

University of Bonn

Katharina Pistor

Columbia University School of Law

Vikrant Vig

London Business School

August 2008

Columbia Law and Economics Working Paper No. 285

The paper explores how legal change affects lending behavior of banks in twelve transition economies of Central and Eastern Europe. In contrast to previous studies, we use bank level rather than aggregate data, which allows us to control for country level heterogeneity and analyze the effect of legal change on different types of lenders. Using a differences-in-differences methodology to analyze the within country variation of changes in creditor rights protection, we find that the credit supplied by banks increases subsequent to legal change. Further, we show that collateral law matters more for credit market development than bankruptcy law. We also show that entrants respond more strongly to legal change than incumbents. In particular, foreign-owned banks extend their lending volume substantially more than do domestic banks, be they private or state owned. The same holds when we use foreign greenfield banks as proxies for new entrants. These results are robust after controlling for a wide variety of possibilities.

Number of Pages in PDF File: 34

Keywords: Law, Finance, Bankruptcy, Secured Lending, Banks

JEL Classification: F34, F37, G21, G28, G33, K39

working papers series

Download This Paper

Date posted: November 13, 2005 ; Last revised: September 2, 2008

Suggested Citation

Haselmann, Rainer F. H. and Pistor, Katharina and Vig, Vikrant, How Law Affects Lending (August 2008). Columbia Law and Economics Working Paper No. 285. Available at SSRN: http://ssrn.com/abstract=846665 or http://dx.doi.org/10.2139/ssrn.846665

Contact Information

Rainer F. H. Haselmann
University of Bonn ( email )
Katharina Pistor
Columbia University School of Law ( email )
435 West 116th Street
New York, NY 10025
United States
212-854-0068 (Phone)
212-854-7946 (Fax)
Vikrant Vig (Contact Author)
London Business School ( email )
Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
Feedback to SSRN

Paper statistics
Abstract Views: 6,683
Downloads: 1,245
Download Rank: 8,001
References:  44
Citations:  41

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.453 seconds