Going Bankrupt in China

53 Pages Posted: 21 Sep 2018 Last revised: 1 Jul 2020

Multiple version iconThere are 3 versions of this paper

Date Written: June 30, 2020

Abstract

Using new case-level data we document a set of stylized facts on bankruptcy in China and study how the staggered introduction of specialized courts across Chinese cities affected insolvency resolution and the local economy. For identification, we compare cases handled by specialized versus traditional civil courts within the same city. Specialized courts hire better-trained judges and cut case duration by 35%. State-owned firms experience larger declines in case duration relative to privately-owned firms, consistent with higher judicial independence. Cities introducing specialized courts experience faster firm entry, larger increase in average capital productivity and reallocation of employment out of "zombie" firms-intensive sectors.

Keywords: Specialized Courts; Political influence; Court efficiency; Zombie firms.

JEL Classification: G33, G34, K22, O16.

Suggested Citation

Li, Bo and Ponticelli, Jacopo, Going Bankrupt in China (June 30, 2020). Available at SSRN: https://ssrn.com/abstract=3251570 or http://dx.doi.org/10.2139/ssrn.3251570

Bo Li

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China
+86 10-627982146 (Phone)

Jacopo Ponticelli (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2211 Campus Dr
Evanston, IL 60208
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/ponticelli/index.html

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
403
Abstract Views
2,185
rank
79,584
PlumX Metrics