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Bankruptcy regime and the banking system

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  • Stef, Nicolae
  • Dimelis, Sophia

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.

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  • Stef, Nicolae & Dimelis, Sophia, 2020. "Bankruptcy regime and the banking system," Economic Modelling, Elsevier, vol. 87(C), pages 480-495.
    • Handle: RePEc:eee:ecmode:v:87:y:2020:i:c:p:480-495
    DOI: 10.1016/j.econmod.2019.12.012
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    More about this item

    Keywords

    Private credit; Spread; Foreign banks; Bankruptcy; Creditors; Rights;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K29 - Law and Economics - - Regulation and Business Law - - - Other

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