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European Journal of Law and Economics

, Volume 47, Issue 1, pp 125–145 | Cite as

Did specialised courts affect the frequency of business bankruptcy petitions in Spain?

  • Claudio DetottoEmail author
  • Laura Serra
  • Marco Vannini
Article
  • 75 Downloads

Abstract

Spanish small businesses rarely file for bankruptcy, and Spanish bankruptcy rates are abnormally small. The historical inadequacy of the Spanish insolvency system has led most enterprises to rely on the de facto alternative mortgage system and to overinvest in fixed tangible assets: a distortion that may trigger significant adverse effects, for instance on the enabling environment of novel entrepreneurship. The reform of the bankruptcy law that took place in Spain some 10 years in order to modernise the insolvency system involved, as a main novelty, the establishment of specialised commercial courts (Juzgados de lo Mercantil). Since the net benefits of specialised judicial functions are in principle ambiguous, we study empirically whether these new bodies had any impact, over and above the economic crisis, on the use of the bankruptcy system. Exploiting the staggered timing of the new courts geography, we estimate an endogenous treatment model with a binary policy variable which allows to measure the effect of the reform on bankruptcy rates. The results support the view that the new bankruptcy law took the right path, but the size of the estimated parameters call for further policy efforts in that direction.

Keywords

Bankruptcy Commercial courts Endogenous treatment effects Spain 

JEL Classification

C31 C33 G33 K2 

Notes

Acknowledgements

C. Detotto acknowledges the financial support by the “Visiting Professor Programme” of the University of Sassari (Resolution No. 53/69 of 20/12/2013). The authors would like to thank an anonymous referee for helpful and valuable comments and suggestions.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of CorsicaCorteFrance
  2. 2.CRENoSSassari, SardiniaItaly
  3. 3.IMIM (Hospital del Mar Medical Research Institute), Center for Research in Occupational Health (CiSAL)Universitat Pompeu FabraBarcelonaSpain
  4. 4.University of SassariSassariItaly

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