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Judicial performance, bank lending and firms' investments: evidence from court leadership turnover

Author

Listed:
  • Franco Fiordelisi

    (Essex Business School)

  • Davide Moretti

    (Bank of Italy)

  • Nazzareno Ruggiero

    (University of Salerno)

  • Konstantinos Baltas

    (Essex Business School)

Abstract

We exploit plausibly exogenous variation in court-president appointments in Italy and show that leadership turnover slows the growth in the duration of bankruptcy proceedings. These effects are larger when incoming presidents are younger, have prior managerial experience, or are locally rooted in the court's jurisdiction, suggesting that career concerns and organizational learning play an important part. Improved judicial efficiency strengthens creditor rights through the credit channel: bank lending expands, late payments decline, and larger firms reallocate investment towards intangible assets.

Suggested Citation

  • Franco Fiordelisi & Davide Moretti & Nazzareno Ruggiero & Konstantinos Baltas, 2026. "Judicial performance, bank lending and firms' investments: evidence from court leadership turnover," Questioni di Economia e Finanza (Occasional Papers) 1073, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_1073_26
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    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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