Court structure and legal efficiency, the case of French échevinage in bankruptcy courts

This paper investigates how the Court's organisation affect judgments. We use a historical accident to derive this impact. Indeed, though the same bankruptcy laws apply on the whole territory, courts in the eastern part of France (in Alsace-Moselle) consist on a mix of professional and non-professional judges, while other French Courts are only composed of lay judges. Using an original dataset of firms with monthly bankruptcy ratings, we analyse the decision to file for bankruptcy. To do so we restrict our sample to firms inside and outside but close to Alsace-Moselle. We study their survival after their rating has dropped between two months. We find mixed Courts in Alsace-Moselle have lower rates of bankruptcy which should be explained by a lower reorganisation rate. We could think that mixed courts are less efficient ex-ante compared to lay courts. Yet both have overall similar level of liquidation rate. Thus, both systems provide similar ex-post efficiency while behaving differently.