Judicial efficiency and loan performance: micro evidence from Serbia

Miloš Božović ()
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Miloš Božović: University of Belgrade

European Journal of Law and Economics, 2021, vol. 52, issue 1, No 2, 33-56

Abstract: Abstract There is plenty of evidence that judicial efficiency reduces credit rationing and increases lending. In contrast, inefficient courts may lead to borrowers’ opportunistic behavior and, as a result, decrease loan performance and the availability of credit. We combine caseload data from commercial courts in Serbia with micro-data on company loans to study the impact of judicial efficiency on loan performance. We document the presence of a robust negative relationship between the clearance rate and the number of days in arrears for companies from the districts under corresponding court jurisdictions. We use financial ratios, industry dummies and time fixed effects to control for the usual determinants of payment ability.

Keywords: Court efficiency; Contract enforcement; Payment arrears; Clearance rate; Credit market (search for similar items in EconPapers)
JEL-codes: C23 G21 K41 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10657-021-09696-4

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