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Judicial Costs and Household Debt

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Abstract

This paper investigates the effect of judicial costs on households debt, merging data drawn from a representative Italian sample, the Survey of Household Income and Wealth, with data on the performance of judicial districts. We estimate a probit model to test the hypothesis that th working of courts affects the probability that households are credit constrained. Moreover, we estimate a tobit model for the amount of debt to investigate if borrowing by those who are not rationed in the credit market is also sensitive to judicial costs. We find that the working of the judicial system impacts on probability of being credit constrained and that the amount of debt held by non-constrained households decreases when the quality of the judicial enforcement worsen.

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  • Daniela Fabbri & Mario Padula, 2001. "Judicial Costs and Household Debt," CSEF Working Papers 65, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  • Handle: RePEc:sef:csefwp:65
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    File URL: http://www.csef.it/WP/wp65.pdf
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    Cited by:

    1. Alberto Zazzaro, 2005. "Should Courts Enforce Credit Contracts Strictly?," Economic Journal, Royal Economic Society, vol. 115(500), pages 166-184, January.
    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.
    3. Mario Sarcinelli, 2005. "Politica bancaria e sviluppo economico: rileggendo l'era menichelliana e quella attuale," Moneta e Credito, Economia civile, vol. 58(229), pages 3-28.
    4. Luca Casolaro & Leonardo Gambacorta & Luigi Guiso, 2005. "Regulation, formal and informal enforcement and the development of the household loan market. Lessons from Italy," Temi di discussione (Economic working papers) 560, Bank of Italy, Economic Research and International Relations Area.
    5. Barbara Cavalletti & Corrado Lagazio & Daniela Vandone & Elena Lagomarsino, 2012. "The role of financial position on consumer indebted-ness. An empirical analysis in Italy," DEP - series of economic working papers 8/2012, University of Genoa, Research Doctorate in Public Economics.
    6. Hallak, Issam, 2003. "Courts and sovereign eurobonds: Credibility of the judicial enforcement of repayment," CFS Working Paper Series 2003/34, Center for Financial Studies (CFS).

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