Judicial Costs and Household Debt

Daniela Fabbri () and Mario Padula
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Daniela Fabbri: Universitat Pompeu Fabra and CSEF, Università di Salerno, http://www.csef.it

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This paper investigates the effect of judicial costs on households debt, merging data drawn from a representative Italian sample, the Survey of Household Income and Wealth, with data on the performance of judicial districts. We estimate a probit model to test the hypothesis that th working of courts affects the probability that households are credit constrained. Moreover, we estimate a tobit model for the amount of debt to investigate if borrowing by those who are not rationed in the credit market is also sensitive to judicial costs. We find that the working of the judicial system impacts on probability of being credit constrained and that the amount of debt held by non-constrained households decreases when the quality of the judicial enforcement worsen.

Date: 2001-08-01
New Economics Papers: this item is included in nep-law and nep-mfd
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Published in Journal of Banking and Finance, 2004 vol. 28, pages 2369-97

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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:65

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