engleski

Reforming the Business Environment to Cope with Over-Indebtedness: the Case of the EU

The problem of business over-indebtedness is growing ; this is reflected in the rising value of unsettled liabilities and, consequently, in the rising number of business insolvencies. The role of legal business environment in treating this problem has proven to be crucial. Within the legal framework, the greatest attention in research has been given to the efficiency of the judicial system and the surrounding and supporting institutions dealing with contract enforcement and insolvency regime. In line with such research background, the World Bank (WB) project aimed at measurement of legal framework efficiency was launched in 2004. The goal of this paper is to evaluate the reformative efforts on the sample of EU national economies based on WB indicators of legal framework efficiency and WB data on actual implemented reforms regarding enforcing contracts and resolving insolvency. Methodology applied is dynamic panel-data estimation, which, besides the data on the existence of legal framework reforms, also includes additional variables that have an impact on judicial efficiency: level of GDP, government expenditures, and level of corruption. The results indicate that reformative efforts taken by the governments in this period have not had the desired effect on the indicators measuring the efficiency of the enforcing contracts and resolving insolvency procedures. Government efforts in the future should be devoted to better design of the reforms, since the resources for the reforms had not been allocated efficiently.

Business Environment Reforms, Enforcing Contracts, Resolving Insolvency, Business Over-Indebtedness

This work has been supported by the Croatian Science Foundation under the project 6558 Business and Personal Insolvency: The Ways to Overcome Excessive Indebtedness and by the University of Rijeka under the project: Approaches and Methods of Cost and Management Accounting in Croatian Public Sector (No. 13.02.1.2.09)