The spillover effects of judicial decisions on debtors behavior

• Grant number: 24/14471-0
• Support Opportunities: Scholarships in Brazil - Post-Doctoral
• Start date: December 01, 2024
• End date: May 31, 2026
• Field of knowledge: Applied Social Sciences - Economics - Quantitative Methods Applied to Economics
• Principal Investigator: Paulo Furquim de Azevedo
• Grantee: Pedro Henrique Duca Amoni
• Host Institution: Instituto de Ensino e Pesquisa (Insper). São Paulo , SP, Brazil

Abstract

This project studies the spillover effect of judicial decisions involving creditors' and debtors' litigations on individuals' decisions to take credit. We will explore the random assignment of lawsuits across judges to identify the impact of pro-debtor decisions on individuals not involved in the suit but who observe its outcome. Throughout this project, we expect to find that people who learn about more favorable behavior towards debtors by the judiciary through information on the outcome of disputes increase their level of debt. Confirming our expectations, the findings will highlight how judicial decisions influence the incentives obtained by third parties not involved in the dispute and the impacts on their financial decisions. As we will use data from civil court rulings of the state of São Paulo, the project's results will contribute to discussing public policies related to the state's and country's judicial organization.