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Does Merging Small Bankruptcy Courts Increase Their Efficiency?

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  • Anne Epaulard
  • Chloé Zapha

Abstract

We estimate the impact of a 2009 reform that merged small bankruptcy courts on the quality of their rulings. A conceptual framework enables us to link difference-in-difference estimates to the impact of the reform on Type 1 errors (restructuring a non-viable firm) and Type 2 errors (liquidating a viable firm). We apply this framework to an (almost) exhaustive sample of 600,000 bankruptcy cases in France that started between 2000 and 2019. The reform unambiguously reduces Type 1 errors while having no impact on Type 2 errors. Post-merger court behavior is determined more by that of the absorbing court than by that of the absorbed one.

Suggested Citation

  • Anne Epaulard & Chloé Zapha, 2025. "Does Merging Small Bankruptcy Courts Increase Their Efficiency?," Working papers 1015, Banque de France.
    • Handle: RePEc:bfr:banfra:1015
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    References listed on IDEAS

    as
    1. Epaulard, Anne & Zapha, Chloé, 2022. "Bankruptcy costs and the design of preventive restructuring procedures," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 229-250.
    2. Jappelli, Tullio & Pagano, Marco & Bianco, Magda, 2005. "Courts and Banks: Effects of Judicial Enforcement on Credit Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 223-244, April.
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    4. Benjamin Iverson, 2018. "Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts," Management Science, INFORMS, vol. 64(11), pages 5370-5394, November.
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    9. Anne Epaulard & Chloé Zapha, 2022. "Bankruptcy costs and the design of preventive procedures," Post-Print hal-03670498, HAL.
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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