Working Paper: CEPR ID: DP12731
Authors: Elias Papaioannou; Stavroula Karatza
Abstract: This paper discusses the key structural deficiencies of the Greek justice system and proposes some concrete policy reforms. In the first part, we provide an anatomy of the Greek legal system using cross-country indicators reflecting the formalism, quality, and speed of the resolution mechanisms. The analysis shows that the Greek justice system is failing to protect citizens, as delays in all types of courts exceed five years and in some instances reach a decade. At the same the quality of laws protecting investors, even property, is low. Using comparative data from other EU jurisdictions, we show that the key reasons behind these failures are the absence of information technology, the lack of supporting to judges staff, the absence of specialized courts and tribunals, and a hugely dysfunctional administration. At the same time, there are minimal checks and balances. In the second part, we detail a set of policy proposals. Our proposals consist of immediate measures for clearing the large backlog and a set of more ambitious medium-term reforms (many of which require a constitutional amendment). Our proposals aim to make the Greek justice system professionally administered, less formalistic, suitably flexible, more responsive and more accountable to society at large. Given the strong link between legal institutions and development, justice reform is an absolute priority of the reform agenda and a sine qua non-condition for the much-needed sustainable recovery of the Greek economy.
Keywords: law and economics; contractual institutions; investor protection; bankruptcy
JEL Codes: K00; K40; O1; O43; O52; O57; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Inefficiencies in the Greek justice system (K40) | Lack of investor protection (G18) |
| Inefficiencies in the Greek justice system (K40) | Hindered economic development (O17) |
| Delays in court proceedings (K41) | Lack of investor protection (G18) |
| Delays in court proceedings (K41) | Hindered economic development (O17) |
| Administrative shortcomings (H83) | Overall performance of the justice system (K40) |
| Legal inefficiency (K49) | Increased inequality (F61) |
| Legal reform (K41) | Improved justice system (K40) |
| Improved justice system (K40) | Broader economic context (F69) |
| Legal inefficiency (K49) | External financial support (O36) |
| External financial support (O36) | Domestic investment (E22) |
| Legal inefficiency (K49) | Entrepreneurship (M13) |