No. 1035 - Judicial efficiency and bankruptcy filing decisions
This paper examines the effects of judicial efficiency on the decisions of financially distressed firms to access insolvency proceedings. Using administrative data on Italian firms and courts, the analysis assesses how the duration of judicial proceedings affects both the use of bankruptcy procedures and the timing of their beginning, highlighting the implications for resource reallocation within the economy.
The results show that lower judicial efficiency reduces the likelihood that financially distressed firms resort to insolvency proceedings. In addition, firms facing slower courts tend to delay access to such procedures, remaining insolvent or in severe financial distress for longer periods. This may hinder the reallocation of resources and negatively affect the productivity and efficiency of the economy.
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21 July 2026
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