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Bankruptcy regime and the banking system

Nicolae Stef and Sophia Dimelis

Economic Modelling, 2020, vol. 87, issue C, 480-495

Abstract: Banks’ behavior as creditors relies heavily on the content of legal rights granted by the national bankruptcy laws. Using a sample of 87 countries over the period 2005–2016, this paper investigates whether the degree of such legal rights influences the following banking indicators: (1) private credit, (2) bank lending-deposit spread, and (3) foreign banks’ presence. Robust dynamic panel estimates indicate a significant and positive impact only on foreign banks’ presence in countries with a high level of creditors’ protection and bankruptcy systems that encourage the survival of financially distressed firms.

Keywords: Private credit; Spread; Foreign banks; Bankruptcy; Creditors; Rights (search for similar items in EconPapers)
JEL-codes: G33 G38 K29 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.econmod.2019.12.012

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