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How do creditor rights matter for debt finance? A review of empirical evidence

In: Research Handbook on Secured Financing in Commercial Transactions

Author

Listed:
  • John Armour
  • Antonia Menezes
  • Mahesh Uttamchandani
  • Kristin van Zwieten

Abstract

The chapter reviews evidence from a new generation of empirical studies, largely focusing on within-country effects, that seek to measure the impact of reforms to creditor rights on access to credit, both on the recovery of debt and rescue of businesses (ex post), but also on the level of credit made available to business and the terms (ex ante). The studies show that effective reform of creditor rights is associated with a lower cost of credit, increased access to credit, improved creditor recovery, and strengthened job preservation. A country’s creditor rights regime plays an important role in mitigating investor risk, which in turn contributes to the improved access and cost of credit and increased financial stability in a country.

Suggested Citation

  • John Armour & Antonia Menezes & Mahesh Uttamchandani & Kristin van Zwieten, 2015. "How do creditor rights matter for debt finance? A review of empirical evidence," Chapters, in: Frederique Dahan (ed.), Research Handbook on Secured Financing in Commercial Transactions, chapter 1, pages 3-25, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:14776_1
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    Citations

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    Cited by:

    1. Özlem Dursun-de Neef, H. & Schandlbauer, Alexander, 2021. "COVID-19 and lending responses of European banks," Journal of Banking & Finance, Elsevier, vol. 133(C).
    2. Closset, Frédéric & Urban, Daniel, 2019. "The balance of power between creditors and the firm: Evidence from German insolvency law," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 454-477.
    3. Masuch, Klaus & Anderton, Robert & Setzer, Ralph & Benalal, Nicholai, 2018. "Structural policies in the euro area," Occasional Paper Series 210, European Central Bank.

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