Earticle

초록

영어

In this paper, we examine the impact of legal uncertainty on economic activity. We develop a simple model that distinguishes between two types of legal uncertainty: idiosyncratic (diversifiable) and systematic (nondiversifiable), both of which can reduce economic activity. We test the model’s predictions using micro-level data on bankruptcy judges and corporate loans in Korea. Exploiting random assignment of cases to judges and exogenous judge rotations in the judicial system, we compute time-varying court-level measures of debtor-friendliness and legal uncertainty as perceived by debtors and creditors. Our results show that firms tend to file for restructuring in courts with high levels of debtor-friendliness and low levels of legal uncertainty. We also find that higher legal uncertainty decreases the size of credit markets, predominantly for high-risk firms. Our analysis further indicates that credit supply is less sensitive to idiosyncratic sources of legal uncertainty than credit demand, as banks can diversify idiosyncratic legal uncertainty, whereas firms cannot.

목차

Abstract
1 Introduction
2 Theoretical Framework
2.1 Model Setup
2.2 Demand, Supply, and Production
2.3 Extensions
2.4 Empirical Implications
3 Institutional Background
3.1 Bankruptcy Courts in Korea
3.2 Bankruptcy Law in Korea
4 Data
5 Empirical Strategy and Results
5.1 Measurement
5.2 Empirical Predictions
5.3 Empirical Analysis
6 Alternative Interpretations and Robustness Tests
6.1 Agents’ Prior and Learning
6.2 Macroeconomic Shocks
6.3 Remaining Concerns
7 Discussion and Implications
8 Concluding Remarks
References
Figure
Table
A Proofs and Extensions
A.1 Proofs
A.2 Model Extension with π ∈ [0,1]

키워드

저자

• Jiwon Lee [ Princeton University ]
• David Schoenherr [ Princeton University ]
• Jan Starmans [ Stockholm School of Economics. ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330