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Do legal origins matter? The case of bankruptcy laws in Europe 1808-1914

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  • Jérôme Sgard

    () (CERI - Centre d'études et de recherches internationales - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

Since the early 1997 paper by La Porta et al., a growing body of research has argued that 'legal origins' have a country-specific, time-invariant effect on property rights and economic development. Following the methodology of La Porta et al., an original database of 51 bankruptcy laws has been built: it ranges over 15 European countries and more than a hundred years (1808-1914), and summarises how the rights and incentives of the parties were defined as the procedures unfolded. The first conclusion is that, over the entire period, all legal traditions strongly protected creditors' rights; only English law comes out prima facie as less protective. Second, evidence suggests that the evolution of these laws was influenced less by their past than by continent-wide trends, arguably linked to capitalist development. An early nineteenth century model thus saw heavy repression of failed debtors and highly regulated judicial procedures. After a transition period from the late 1860s to the late 1880s, prison for debt was abandoned, rehabilitation became easier, and the parties were given much more room to recontract on property rights.

Suggested Citation

  • Jérôme Sgard, 2006. "Do legal origins matter? The case of bankruptcy laws in Europe 1808-1914," Post-Print hal-01021354, HAL.
  • Handle: RePEc:hal:journl:hal-01021354
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-01021354
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    References listed on IDEAS

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    1. Martin, Albro, 1974. "Railroads and the Equity Receivership: An Essay on Institutional Change," The Journal of Economic History, Cambridge University Press, vol. 34(03), pages 685-709, September.
    2. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
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    Cited by:

    1. Guerriero, Carmine, 2016. "Endogenous legal traditions and economic outcomes," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 416-433.
    2. Paolo Di Martino & Michelangelo Vasta, 2010. "Companies' insolvency and 'the nature of the firm' in Italy, 1920s-70s -super-1," Economic History Review, Economic History Society, vol. 63(1), pages 137-164, February.
    3. Sgard, Jérôme, 2016. "Courts at work: Bankruptcy statutes, majority rule and private contracting in England (17th–18th century)," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 450-460.

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