No. 1073 - Judicial performance, bank lending and firms' investments: evidence from court leadership turnover
Italian courts exhibit considerable heterogeneity in the average duration of judicial proceedings, which can be significantly influenced by organizational factors. This paper investigates whether leadership turnover among court presidents, who perform crucial managerial functions, may represent an organizational shock that can enhance judicial efficiency and, consequently, affect credit markets and the investment decisions of firms.
Court leadership turnover has a positive impact on the evolution of the average duration of bankruptcy proceedings, particularly when the incoming president is considerably younger than their predecessor, has prior managerial experience, and comes from the same geographical area as the court of assignment. Improved judicial efficiency is associated with increased bank lending, reduced delays in loan repayments and, for larger firms, a reallocation of their investments towards intangible assets.
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