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- Title
Lending quality and contracts enforcement reforms.
- Authors
D'Apice, Vincenzo; Fiordelisi, Franco; Puopolo, Giovanni W.
- Abstract
We investigate the causal relationship between the efficiency of country's judicial system and the quality of bank lending, using the contracts enforcement reforms implemented in four European countries as a quasi‐natural experiment. We find that strengthening contracts enforcement determines large, significant and persistent reductions in banks' nonperforming loans. Our results have important policy implications: they point at judicial efficiency as a critical determinant of the stability of the banking sector and its resilience to adverse shocks such as the recent Covid‐19 pandemic.
- Subjects
BANK loans; BANKING industry; COVID-19 pandemic; NONPERFORMING loans; CONTRACTS; REFORMS
- Publication
European Financial Management, 2024, Vol 30, Issue 1, p440
- ISSN
1354-7798
- Publication type
Article
- DOI
10.1111/eufm.12422