European Journal of Law and Economics

, Volume 33, Issue 1, pp 101–126 | Cite as

Bankruptcy systems and economic performance across countries: some empirical evidence



This paper examines the relationship between the insolvency systems and the investment share of GDP across countries. The objective is to find out the relationship between bankruptcy procedures and economic performances around the world. Empirical evidence suggests that: (1) the investment share of GDP is higher in those countries characterized by highly efficient bankruptcy system; the more efficient the insolvency procedures in terms of time, cost and recovery rate, the more readily available debt is and the higher the Investment/GDP ratio is; (2) the investment share of gross domestic product is positively associated with the degree of sophistication of the Bankruptcy Law, at least below a certain level of legal production; (3) data suggest some complementary effect between Bankruptcy Law and Enforcement for rich countries, while the interaction term indicates some substitution effect when poor countries are considered. Some policy implications conclude the work.


Bankruptcy law Enforcement Investments Economic performance 

JEL Classifications

G33 K40 O40 


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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of Economics and StatisticsUniversity of CalabriaRendeItaly

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