New Economics Papers
on Law and Economics
Issue of 2007‒12‒19
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Deregulation of Business By Yakovlev, Evgeny; Zhuravskaya, Ekaterina
  2. Litigation and settlement : new evidence from labor courts in Mexico By Silva-Mendez, Jorge Luis; Sadka, Joyce; Kaplan, David S.
  3. Collective Action Clauses in International Sovereign Bond Contracts - Whence the Opposition? By Häseler, Sönke
  4. What determines banks’ customer choice? Evidence from transition countries By De Haas, Ralph; Ferreira, Daniel; Taci, Anita

  1. By: Yakovlev, Evgeny; Zhuravskaya, Ekaterina
    Abstract: What determines the enforcement of deregulation reform of business activities? What are the outcomes of deregulation? We address these questions using an episode of a drastic reform in Russia between 2001 and 2004 which liberalized registration, licensing, and inspections. Based on the analysis of micro-level panel data on regulatory burden, we find that: 1) On average, the reform reduced the administrative costs of firms; but, the progress of reform had a substantial geographical variation. 2) The enforcement of deregulation reform was better in regions with a transparent government, low corruption, better access of the public to independent media sources, a powerful industrial lobby, and stronger fiscal autonomy. 3) Using the exogenous variation in regulation generated by the interaction of reform and its institutional determinants, we find a substantial positive effect of deregulation on net entry and small business employment and no effect on pollution and public health. The results support public choice theory of the nature of regulation and are inconsistent with the predictions of public interest theory.
    Keywords: Deregulation; Enforcement; Entry; Public choice; Reform; Regulation; Transparency
    JEL: H10 K2 K20 L50
    Date: 2007–12
  2. By: Silva-Mendez, Jorge Luis; Sadka, Joyce; Kaplan, David S.
    Abstract: Using a newly assembled data set on procedures filed in Mexican labor tribunals, the authors of this paper study the determinants of final awards to workers. On average, workers recover less than 30 percent of their claim. The strongest result is that workers receive higher percentages of their claims in settlements than in trial judgments. It is also found that cases with multiple claimants against a single firm are less likely to be settled, which partially explains why workers involved in these procedures receive lower percentages of their claims. Finally, the authors find evidence that a worker who exaggerates his or her claim is less likely to settle.
    Keywords: Bankruptcy and Resolution of Financial Distress,Arbitration,Information Security & Privacy,Labor Markets,Judicial System Reform
    Date: 2007–12–01
  3. By: Häseler, Sönke
    Abstract: In the debate on strengthening the international financial architecture, which peaked in 2002 after a series of emerging market sovereign debt crises, the universal adoption of collective action clauses (CACs) was the most promising reform proposal. Academics and the official sector had been promoting CACs at least since 1995, yet market practice did not begin to change until 2003. This delay is often attributed to the opposition of investors and sovereign borrower to CACs. This paper evaluates the publicly stated as well as the suspected private motives of the two sides to block the spread of CACs. It draws on a wide range of existing evidence and adds some new theoretical considerations to show that there is no reason to be sceptical of CACs unless bailouts exist as an alternative crisis resolution mechanism. This conclusion may be of interest purely for the sake of historical accuracy. But more importantly, it may help to better understand any potential future resistance by market participants, e.g. in the process of introducing CACs in bonds governed by German law.
    Keywords: Collective Action Clauses Sovereign Debt Restructuring
    JEL: K3 F3
    Date: 2007–05
  4. By: De Haas, Ralph; Ferreira, Daniel; Taci, Anita
    Abstract: This paper explores how bank characteristics and the institutional environment influence the composition of banks’ loan portfolios. Using a new data set based on the recent EBRD Banking Environment and Performance Survey (BEPS), which was conducted in 2005 for 220 banks in 20 transition countries, we show that bank characteristics such as ownership and size are important determinants of bank customer focus. In particular, we find that foreign banks are relatively strongly involved in mortgage lending and lending to subsidiaries of foreign companies, while lending relatively less to large domestic firms. We also find that small banks lend relatively more to SMEs than large banks do, while large banks appear to have a comparative advantage in lending to large customers. We do not find much evidence for the hypothesis that better legal credit protection changes bank portfolio composition. An exception is that banks that perceive pledge and mortgage laws to be of high quality focus more on mortgage lending.
    Keywords: banking; portfolio composition
    JEL: K22 F3 P27 G21
    Date: 2007

This issue is ©2007 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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