We investigate the causal relationship between the efficiency of country's judicial system and the quality of bank lending, using the contracts enforcement reforms implemented in four European countries as a quasi-natural experiment. We find that strengthening contracts enforcement determines large, significant and persistent reductions in banks' nonperforming loans. Our results have important policy implications: they point at judicial efficiency as a critical determinant of the stability of the banking sector and its resilience to adverse shocks such as the recent Covid-19 pandemic.
D'Apice, V., Fiordelisi, F., Puopolo, G.w. (2023). Lending quality and contracts enforcement reforms. EUROPEAN FINANCIAL MANAGEMENT [10.1111/eufm.12422].
Lending quality and contracts enforcement reforms
Fiordelisi, F;
2023-01-01
Abstract
We investigate the causal relationship between the efficiency of country's judicial system and the quality of bank lending, using the contracts enforcement reforms implemented in four European countries as a quasi-natural experiment. We find that strengthening contracts enforcement determines large, significant and persistent reductions in banks' nonperforming loans. Our results have important policy implications: they point at judicial efficiency as a critical determinant of the stability of the banking sector and its resilience to adverse shocks such as the recent Covid-19 pandemic.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
