2Do Legal Origins Matter? The Case of Bankruptcy Laws in Europe (1808-1914)

Since LLSV early 1998 paper, a growing body of research has argued that “legal origins ” have a country-specific, time-invariant effect on property rights and economic development. Following upon LLSV’s own methodology, an original data-set of 51 bankruptcy laws has been built: it ranges over 15 European countries and more than hundred years (1808-1914), and summarises how the rights and incentives of the parties were defined, as the procedure unfold. The first conclusion is that all legal traditions protected strongly creditors ’ rights, over the whole period; only English law comes out prima facie as less protective. Evidences then suggest that the evolution of these laws was influenced less by their past than by continent-wide trends, arguably linked to capitalist development. An early century model thus saw heavy repression of failed debtors and highly regulated procedures. After a transition period from the late 1860’s to the late 1880s’, prison for debt was abandoned, rehabilitation became easier, and the parties got much more room to bargain