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The Importance of an Effective Legal System for Credit Markets: The Case of Argentina

40 Pages Posted: 19 Apr 2011  

Andrew Powell

Universidad Torcuato Di Tella - School of Business; Inter-American Development Bank (IDB); Harvard University - Center for International Development (CID)

Marcela Cristini

affiliation not provided to SSRN

Ramiro Moya

affiliation not provided to SSRN

Date Written: February 2001

Abstract

Argentina is a federal country and hence, although laws are national and the central bank has national jurisdiction as a regulator of the financial system, the 24 Argentine provinces have independent judicial authority. In this paper we analyze how variations in the effectiveness of the legal system across the different provinces have affected the development of credit markets. We find strong results. Provinces with poor legal enforcement have less credit available to borrowers and banks’ non-performing loans are higher. We conclude that the effectiveness of the legal system remains a highly significant variable in determining the development of the Argentine credit market and that improvements in the legal system would result in a significant increase in the availability of credit.

Suggested Citation

Powell, Andrew and Cristini, Marcela and Moya, Ramiro, The Importance of an Effective Legal System for Credit Markets: The Case of Argentina (February 2001). IDB Working Paper No. 142. Available at SSRN: https://ssrn.com/abstract=1814689 or http://dx.doi.org/10.2139/ssrn.1814689

Andrew Powell (Contact Author)

Universidad Torcuato Di Tella - School of Business ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires
Argentina
+5411 4787-9349 (Phone)
+5411 4783-3220 (Fax)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Harvard University - Center for International Development (CID) ( email )

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

Marcela Cristini

affiliation not provided to SSRN

No Address Available

Ramiro Moya

affiliation not provided to SSRN

No Address Available

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