LAW ENFORCEMENT AND FIRM FINANCING: THEORY AND EVIDENCE

• 成果类型: Article
• 署名作者: Fabbri, Daniela
• 署名单位: University of Amsterdam
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• 发表日期: 2010
• 页码: 776-816
• 关键词: investor protection; credit

摘要

This paper investigates the economic effects on firms' policies of differences in law enforcement. We find that in judicial districts where trials are longer, bank financing is more costly and firms are smaller. However, we do not find any significant relation between law enforcement and firms' leverage ratio. We rationalize our results within a two-region dynamic general equilibrium model with asymmetric information and collateralized credit contracts. We find that a stronger enforcement of creditors' rights not only improves credit conditions (partial equilibrium effect), but also fosters individual capital accumulation (general equilibrium effect). In line with this theoretical prediction, we find a positive relation between individual savings and quality of legal enforcement. (JEL: E20, K40, G32)