Contract Enforcement in Transition

Simon Johnson, John McMillan and Christopher Woodruff ()

No 2081, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The mix of formal and informal mechanisms for contract enforcement is examined using survey data from Russia, Ukraine, Romania, Poland, and Slovakia. Using the size of trade credit to quantify the success of contracting, we ask: Do the courts have a perceptible effect on contracting? When can a firm rely on its customer to repay trade credit voluntarily? Which is more effective, the courts or relational contracting? Do trade associations play a role in contract enforcement? Does relational contracting entail inefficiencies? Is the reliance on relation contracting merely a transitory phenomenon, reflecting the inadequacy of these countries' legal systems?

Keywords: courts; relational contracting; Transition (search for similar items in EconPapers)
JEL-codes: K12 M13 P30 (search for similar items in EconPapers)
Date: 1999-02
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