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

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  • Jérôme Sgard

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," Sciences Po publications info:hdl:2441/6824, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/6824
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    File URL: http://spire.sciencespo.fr/hdl:/2441/6824/resources/sgard-ereh-2006.pdf
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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. Iain Ramsay, 2012. "Between Neo-Liberalism and the Social Market: Approaches to Debt Adjustment and Consumer Insolvency in the EU," Journal of Consumer Policy, Springer, vol. 35(4), pages 421-441, December.
    3. 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.
    4. 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.
    5. Le Bris, David, 2013. "Customary versus Civil Law within Old Regime France," MPRA Paper 52123, University Library of Munich, Germany.

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