Varieties of creditor protection: insolvency law reform and credit expansion in developed market economies

Deakin, Simon, Mollica, Viviana and Sarkar, Prabirjit (2017) Varieties of creditor protection: insolvency law reform and credit expansion in developed market economies. Socio-Economic Review, 15 (2). pp. 359-384. ISSN 1475-1461

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    Abstract

    We examine the relationship between creditor protection, law reform and credit expansion using longitudinal data for four OECD countries between 1970 and 2005. By decomposing the different elements of creditor protection, we show that civil law countries (France and Germany) have developed a high level of protection for creditors in the form of controls over the management of debtor firms, while common law countries (UK and USA) have arrived at a high degree of protection in relation to secured creditors' contractual rights over firms' assets. Using panel causality tests and dynamic panel data modelling, we show that laws strengthening creditors' control over debtor firms in these four countries had a long-term positive effect on the expansion of private credit, while reforms increasing secured creditors' rights had a negative effect. We explore the implications of our findings for legal origin theory and the varieties of capitalism approach.

    Item Type: Article
    Uncontrolled Keywords: capitalism,varieties,economic reform,financial markets,institutional complementarity
    Faculty \ School: Faculty of Social Sciences > School of Law
    Related URLs:
    Depositing User: Pure Connector
    Date Deposited: 27 Apr 2017 06:50
    Last Modified: 18 Feb 2019 00:55
    URI: https://ueaeprints.uea.ac.uk/id/eprint/63314
    DOI: 10.1093/ser/mww005

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