Work

Judicial Reform and Banks Credit Risk Exposure*

Year: 2024

Type: article

Abstract: The aim of this paper is to examine the impact of the Judicial System Reform, which was introduced in Italy in 2012, on the efficiency of the judicial system and the exposure of banks to credit risk in terms of Non‐performing loans. To this end, we apply a difference‐in‐differences approach, using a dataset that covers annual judicial proceedings from 2010 to 2017, supplemented by bank balance sheet data. Our findings indicate that the reform had a detrimental effect on both judicial efficiency and the NPL ratio. The negative impact is especially pronounced in courts that were previously more efficient, suggesting that the court mergers may have resulted in diseconomies of scale.

Source: Oxford Bulletin of Economics and Statistics

DOI: 10.1111/obes.12652

Authors: Giulia Canzian, Antonella Rita Ferrara

Institutions: Joint Research Centre, University of Calabria

Language: English

Topic: Law, Economics, and Judicial Systems

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $3,730