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Michal S. Gal and Mor Bakhoum
John Armour, Antonia Menezes, Mahesh Uttamchandani and Kristin van Zwieten
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.