We investigate whether cross-country differences in the legal system influence demand-side credit constraints. We explore the notion of discouraged borrowers — firms that choose not to apply for bank credit because they anticipate rejection. Employing survey data from 46 economies, we find that rapid and less costly court proceedings, lower procedural complexity in court processes, and higher recovery rates under bankruptcy lead to the lower likelihood of borrower discouragement. These results are more pronounced in countries with strong creditor protections in relation to company reorganization and liquidation. The results corroborate the supply-side view that strong creditor rights and their efficient enforceability alleviate banks’ participation constraints in the loan market, thereby encouraging small and medium-sized enterprises to apply for credit in the first place. We also find that differences in institutional settings, such as higher regulatory quality, better control of corruption, and the rule of law, lead to lower rates of credit self-rationing in the loan market.

中文翻译：

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法律和司法效率对借款人劝阻的事前效果：国际证据

我们调查了法律制度中的跨国差异是否会影响需求方的信贷约束。我们探讨了沮丧的借款人的概念-那些因为预期会遭到拒绝而选择不申请银行信贷的公司。利用来自46个经济体的调查数据，我们发现快速且成本较低的法院诉讼程序，较低的法院程序复杂性以及破产保护下的较高追回率导致降低了借款人劝阻的可能性。这些结果在与公司重组和清算有关的拥有强大债权人保护的国家中更为明显。结果证实了供应方的观点强大的债权人权利及其有效的可执行性减轻了银行在贷款市场中的参与限制，从而鼓励中小企业首先申请信贷。我们还发现，制度环境的差异（例如更高的监管质量，更好的腐败控制和法治）导致贷款市场中的信贷自给率降低。