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Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level

Abstract

The weight of the housing tenancy market in Spain is very low. It is frequently argued that an ineffective judicial system, implying a cumbersome procedure to evict a non-paying tenant or simply requiring a long period to execute a decision, may be an important determinant of the tenancy market’s weakness, as it constrains the effective supply by reducing the profitability of landlords. This research studies this effect econometrically using a panel data approach and exploring differences in judicial efficacy among the Spanish provinces. After controlling for several other factors, this study concludes that the degree of inefficacy of the judicial system has a positive impact on the property share among provinces in Spain.

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Correspondence to Juan S. Mora-Sanguinetti.

Additional information

I am grateful to participants in the seminar of the Banco de España-Eurosystem and to Stefano Battilossi, Ángel Estrada, Pablo Hernández de Cos, Llanos Matea, Carmen Martínez Carrascal, Paloma López García, Jorge Martínez Pagés, Claire McHugh and to the three anonymous referees who reviewed this paper and its working paper version for their useful comments and suggestions. I am also in debt with María Gil for her assistance and preparation of the graphs. The views expressed are those of the author and should not be attributed to the Banco de España, the Eurosystem or the OECD.

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Mora-Sanguinetti, J.S. Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level. SERIEs 3, 339–365 (2012). https://doi.org/10.1007/s13209-011-0063-6

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Keywords

  • Judicial efficacy
  • Property market
  • Tenancy market
  • Contract enforcement

JEL Classification

  • K40
  • R21