The impact of judicial prejudice in bankruptcy on creditors and local financial development

Xue Dong Dai and Lisi Niu

Finance Research Letters, 2024, vol. 67, issue PA

Abstract: In this research, we explore the implication of judicial prejudice in bankruptcy for creditor interests and local financial market development. Based on prefecture-level data, we find compelling evidence that judicial prejudice leads to capital market frictions. Regions with stronger judicial prejudice have higher borrowing costs. Moreover, judicial prejudice is negatively related to local financial market development. In sum, our research sheds light on the impact of judicial prejudice on financial market development.

Keywords: Judicial prejudice; Creditor interests; Financial market; Borrowing costs (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324008080

DOI: 10.1016/j.frl.2024.105778

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