Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269205 
Year of Publication: 
2022
Series/Report no.: 
LawFin Working Paper No. 49
Publisher: 
Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin), Frankfurt a. M.
Abstract: 
We use data on financially distressed Chinese companies in order to study a debt market where property rights are crudely defined and poorly enforced. To help with identification we use an event where a business-friendly province published new guidelines regarding the administration and enforcement of assets pledged as collateral. Although by no means a comprehensive reform of bankruptcy law or property rights, by instructing courts to enforce existing, albeit rudimentary, contractual rights the new guidelines virtually eliminated creditors runs and produced a sharp increase in the survival rate of financially-distressed companies. These changes illustrate how piecemeal reforms of property rights and their enforcement may have a significant impact on economic outcomes. Our analysis and results challenge the view that a fully fledged system of private property is a precondition for economic development.
Subjects: 
Finance and development
property rights
financial distress
creditors runs
JEL: 
G21
G23
G33
N25
O43
P48
Document Type: 
Working Paper

Files in This Item:
File
Size
630.02 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.