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Debt Enforcement Around the World


Simeon Djankov


Ministry of Finance; World Bank

Oliver Hart


Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Caralee McLiesh


World Bank - International Finance Corporation (IFC)

Andrei Shleifer


Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
December 20, 2006

ECGI - Finance Working Paper No. 147/2007

Abstract:     
We present insolvency practitioners from 88 countries with an identical case of a hotel about to default on its debt, and ask them to describe in detail how debt enforcement against this hotel will proceed in their countries. We use the data on time, cost, and the likely disposition of the assets (preservation as a going concern versus piecemeal sale) to construct a measure of the efficiency of debt enforcement in each country. We identify several characteristics of debt enforcement procedures, such as the structure of appeals and availability of floating charge finance, that influence efficiency. Our measure of efficiency of debt enforcement is strongly correlated with per capita income and legal origin and predicts debt market development across countries. Interestingly, it is also highly correlated with measures of the quality of contract enforcement and public regulation obtained in other studies.

Number of Pages in PDF File: 69

Keywords: bankruptcy, legal origins

JEL Classification: G33, K2

working papers series


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Date posted: December 21, 2006  

Suggested Citation

Djankov, Simeon, Hart , Oliver D., McLiesh, Caralee and Shleifer, Andrei, Debt Enforcement Around the World (December 20, 2006). ECGI - Finance Working Paper No. 147/2007. Available at SSRN: http://ssrn.com/abstract=953000 or http://dx.doi.org/10.2139/ssrn.953000

Contact Information

Simeon Djankov
Ministry of Finance ( email )
Rakovski Avenue 102
Sofia, 1040
Bulgaria
World Bank ( email )
2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States
202-473-4748 (Phone)
202-473-5758 (Fax)
HOME PAGE: http://www.doingbusiness.org
Oliver D. Hart
Harvard University - Department of Economics ( email )
Littauer Center
Cambridge, MA 02138
United States
617-496-3461 (Phone)
617-495-7730 (Fax)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Caralee McLiesh
World Bank - International Finance Corporation (IFC) ( email )
2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States
Andrei Shleifer (Contact Author)
Harvard University - Department of Economics ( email )
Littauer Center
Cambridge, MA 02138
United States
617-495-5046 (Phone)
617-496-1708 (Fax)
HOME PAGE: http://www.economics.harvard.edu/~ashleife/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Feedback to SSRN (Beta)


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