Does Judicial Efficiency Lower the Cost of Credit

By Luc Laeven, G. Majnoni. 2003

248 citations recorded by the source corpus.

The authors investigate the effect of judicial efficiency on banks' lending spreads for a large cross section of countries. They measure bank interest rate spreads for 106 countries at an aggregate level, and for 32 countries at the level of individual banks. The authors find that-after controlling for a number of other country characteristics-judicial efficiency, in addition to inflation, is the main driver of interest rate spreads across countries. This suggests that in addition to improving the overall macroeconomic climate in a country, judicial reforms, through a better enforcement of legal contracts, are critical to lowering the cost of financial intermediation for households and firms.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/8c6af2b10fb07dd9d199a9e496cb7f5be0e982ba

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Citations in the corpus

Finance, Financial Sector Policies, and Long-Run Growth (2008, background): “In countries where legal systems are more effective, financial systems have lower interest rate spreads and are more efficient (Demirgüç-Kunt, Laeven, and Levine, 2004; Laeven and Majnoni, 2005).”
Are financial development and corruption control substitutes in promoting growth (2008, background): “However, equality of the respective growth dividends cannot be rejected at standard confidence levels in 9/12 of the Table 2 specifications; of the 3/12 where it can, all involve the Corruption ICRG measure and only one can reject at the 5% level.(39) Of course, costs of such improvements are not ta”
Information Sharing and Credit: Firm-Level Evidence from Transition Countries (2009, unknown): “, 2005) and more expensive credit (Demirguc-Kunt et al., 2004; Laeven and Majnoni, 2005).”
Determinants of bank market structure: efficiency and political economy variables (2009, methodology): “This measure has also been used by Demirgüc-Kunt et al. (2004), Beck et al. (2005) and Laeven and Majnoni (2005).”
Does “Good” Corporate Governance Help in a Crisis? The Impact of Country‐ and Firm‐Level Governance Mechanisms in the European Financial Crisis (2013, background): “Moreover, superior judicial efficiency can improve the efficacy of loan recovery (Laeven & Majnoni, 2005).”
The Effects of Bank Regulations, Competition, and Financial Reforms on Banks’ Performance (2011, background): “Finally, Leaven and Majnoni (2005) investigate the effect of judicial efficiency on bank's lending spreads for a large cross-section of countries.”
Country Creditor Rights, Information Sharing and Commercial Banks Profitability Persistence across the world (2007, background): “Another effect of judicial efficiency is a reduction of banks’ lending spreads (Laeven and Majnoni, 2005).”