Laeven, LucMajnoni, Giovanni2014-04-252014-04-252003-10https://hdl.handle.net/10986/18042The authors investigate the effect of judicial efficiency on banks' lending spreads for a large cross section of countries. They measure bank interest rate spreads for 106 countries at an aggregate level, and for 32 countries at the level of individual banks. The authors find that-after controlling for a number of other country characteristics-judicial efficiency, in addition to inflation, is the main driver of interest rate spreads across countries. This suggests that in addition to improving the overall macroeconomic climate in a country, judicial reforms, through a better enforcement of legal contracts, are critical to lowering the cost of financial intermediation for households and firms.en-USCC BY 3.0 IGOJUDICIAL PROCESSBANKING SYSTEMSCROSS-COUNTRY EXPERIENCEINTEREST RATE STRUCTURESAGGREGATE VARIABILITYINFLATIONARY PRESSURESMACROECONOMIC STABILITYJUDICIAL REFORMLAW ENFORCEMENTFINANCIAL INTERMEDIATIONACCOUNTINGADVERSE SELECTIONBALANCE SHEETBALANCE SHEETSBANK CREDITBANK LENDINGBANK LOANSBANK REGULATIONBANK SIZEBANK STRUCTUREBANKING SYSTEMBANKSBORROWINGCOMPETITIVENESSCONSUMER PRICE INDEXCOST OF CAPITALCREDIT MARKETSDEMAND CURVEDEPOSITSDEVELOPMENT ECONOMICSDISCOUNT RATEEARNING ASSETSECONOMIC POWEREMPIRICAL ANALYSISEMPIRICAL EVIDENCEEQUILIBRIUMEXPROPRIATIONFINANCIAL INTERMEDIATIONFINANCIAL MARKETSFINANCIAL SERVICESFINANCIAL SYSTEMSFIXED ASSETSFOREIGN BANKSFOREIGN CURRENCYFOREIGN ENTRYFUTURE RESEARCHGDPGLOBALIZATIONGOVERNMENT BONDSGOVERNMENT REGULATIONSINCOME STATEMENTSINEFFICIENCYINFLATIONINFLATION RATEINSURANCEINSURANCE POLICIESINTEREST EXPENSEINTEREST INCOMEINTEREST RATEINTEREST RATESLAWSLEGAL FRAMEWORKLEGAL PROVISIONSLENDING RATESLIQUIDITYMARKET POWERMIDDLE INCOME COUNTRIESMONEY MARKET FUNDSMORAL HAZARDOPERATING COSTSOPERATING EFFICIENCYOPERATING EXPENSESPOLITICAL ECONOMYPORTFOLIOPRIVATE PROPERTYPROBLEM LOANSPROFITABILITYPROPERTY RIGHTSREGULATORY FRAMEWORKRESERVE REQUIREMENTSSAVINGSSAVINGS DEPOSITSSECURITIESSUBSIDIARIESVALUATIONinterest rate spreads10.1596/1813-9450-3159