When do creditor rights work?

Safavian, Mehnaz S.; Sharma, Siddharth

doi:10.1016/j.jce.2007.05.004

Cited by 72 publications

(29 citation statements)

References 13 publications

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“…As also Safavian and Sharma (2007) verify empirically, it is not only the creditor-friendliness of the laws that determines the effective strength of creditor rights in a country but also the enforcement of the laws. This is part of our model, as only an effective creditor-orientation constitutes a credible threat of liquidation.…”

Section: Empirical Hypothesesmentioning

confidence: 85%

“…Starting with La Porta et al (1997Porta et al ( , 1998 this strand of the literature provides ample evidence of the central role legal institutions and creditor rights play for capital markets. Both laws and their enforcement matter in credit markets (Safavian and Sharma (2007)). Maksimovic (1998, 1999) show that in countries with more efficient legal systems, more firms use long-term external finance (1998) and firms do use 6 Aggarwal and Kyaw (2004) identify that for US multinational affiliates among others low political risks were associated with high external debt ratios.…”

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confidence: 99%

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Creditor Rights and Debt Allocation within Multinationals

Akbel

Schnitzer

2008

SSRN Journal

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We analyze the optimal debt structure of multinational corporations choosing between centralized or decentralized borrowing. We identify how this choice is affected by creditor rights and bankruptcy costs, taking into account managerial incentives and coinsurance considerations. We find that partially centralized borrowing structures are optimal with either weak or strong creditor rights. For intermediate levels of creditor rights fully decentralized (centralized) borrowing structures are optimal if managers have strong (weak) empire building tendencies. Decentralized borrowing is more attractive for companies focussing on short-term profitability. Credits are rather taken in countries with better creditor rights and more efficient insolvency systems.JEL classification: G32, F23

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Section: Empirical Hypothesesmentioning

confidence: 85%

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confidence: 99%

Creditor Rights and Debt Allocation within Multinationals

Akbel

Schnitzer

2008

SSRN Journal

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“…They observed that the same legal system led to larger firm size in provinces with more efficient courts. And in a cross-country study, Safavian and Sharma (2007) confirmed that creditor rights and efficient courts were complements.…”

Section: Complementsmentioning

confidence: 89%

The formal and informal institutional framework of capital accumulation

Méon

Sekkat

2015

Journal of Comparative Economics

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This paper studies the impact of social trust and formal legal and institutional determinants of capital accumulation in a panel of countries. It reports that formal determinants and trust interact, and that the two are substitutes. Specifically, the marginal impact of formal legal institutions decreases with trust, and vice versa. These findings apply both to total investment and to its foreign component, foreign direct investment. Abstract: This paper studies the impact of social trust and formal legal and institutional determinants of capital accumulation in a panel of countries. It reports that formal determinants and trust interact, and that the two are substitutes. Specifically, the marginal impact of formal legal institutions decreases with trust, and vice versa. These findings apply both to total investment and to its foreign component, foreign direct investment.Keywords: investment, foreign direct investment, institutions, trust.JEL classification: E020, E220, F210, O110. 1 The formal and informal institutional framework of capital accumulation October 2013Abstract: This paper studies the impact of social trust and formal legal and institutional determinants of capital accumulation in a panel of countries. It reports that formal determinants and trust interact, and that the two are substitutes. Specifically, the marginal impact of formal legal institutions decreases with trust, and vice versa. These findings apply both to total investment and to its foreign component, foreign direct investment.

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“…When investigating the legal provisions made to protect creditor rights and the quality of the legal system that can be used to enforce these rights, they are complements (Safavian and Sharma, 2007). The results on the impact of information show that the results may depend on the type of measure for access to finance.…”

Section: Introductionmentioning

confidence: 99%

Access to Versus Use of Loans: What are the True Determinants of Access?

Hainz

Nabokin²

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may University of MunichAbstract: Access to finance is a prerequisite for economic development. Existing studies measure access by the use of finance. We develop a direct measurement for access to finance from the Business Environment and Enterprise Performance Survey 2005 data. We determine whether a firm without a loan does not need one or is indeed credit-constrained. The determinants of access estimated in a Heckman selection model are compared with those of use. Our results show that firm age and sector effects do not influence access although they are significant in the use regression. The reasons are differences in demand.

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When do creditor rights work?

Cited by 72 publications

References 13 publications

Creditor Rights and Debt Allocation within Multinationals

Creditor Rights and Debt Allocation within Multinationals

The formal and informal institutional framework of capital accumulation

Access to Versus Use of Loans: What are the True Determinants of Access?

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