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The impact of structural reforms of the judicial system: a survey

Author

Listed:
  • Ana Gouveia

    () (GPEARI - Research and Economic Policy Division)

  • Sílvia Santos
  • Corinna Herber

Abstract

This paper surveys the literature on the impact of structural reforms of the judicial system. We focus on two key types of reforms: those enhancing the overall efficiency of the system, in terms of quantitative outcomes; and those aiming at enhancing the bankruptcy regime. In the first branch, and given the way the existing literature is organized, we proceed in two steps. We first provide an overview of the studies linking judicial reforms with sectoral performance. We then elaborate on the effects of this improved performance on economic outcomes. In the second branch, we directly present the impact on economic outcomes, in particular concerning access to finance and investment. In a nutshell, reforms that increase courts’ size, increase spending on information and communication technologies (ICT), improve governance or foster education and training have a positive impact on judicial efficiency, which, in turn, promotes investment, ensures better credit and allows firms to thrive. Concerning bankruptcy regimes, there is evidence that a more efficient system is related with a lower cost of funding and a higher amount and length of credit in the economy and consequently with more investment, innovation and entrepreneurship. These empirical results highlight the relevance of promoting judicial system reforms, as a way to ensure sustained economic growth.

Suggested Citation

  • Ana Gouveia & Sílvia Santos & Corinna Herber, 2017. "The impact of structural reforms of the judicial system: a survey," GEE Papers 0064, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jan 2017.
  • Handle: RePEc:mde:wpaper:0064
    as

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    File URL: http://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_64.pdf
    File Function: First version, 2017
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    References listed on IDEAS

    as
    1. Kee‐Hong Bae & Vidhan K. Goyal, 2009. "Creditor Rights, Enforcement, and Bank Loans," Journal of Finance, American Finance Association, vol. 64(2), pages 823-860, April.
    2. Aloisio Araujo & Bruno Funchal & Rafael Ferreira, 2010. "The Brazilian Bankruptcy Law Experiment," Fucape Working Papers 23, Fucape Business School.
    3. Viral V. Acharya & Krishnamurthy V. Subramanian, 2009. "Bankruptcy Codes and Innovation," Review of Financial Studies, Society for Financial Studies, vol. 22(12), pages 4949-4988, December.
    4. Araujo, Aloisio P. & Ferreira, Rafael V.X. & Funchal, Bruno, 2012. "The Brazilian bankruptcy law experience," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 994-1004.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Structural reforms; judicial system; bankruptcy regimes; economic growth;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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