It is well established that legal rules designed to protect corporate shareholders and creditors are associated with more developed financial markets and stronger economic growth. Yet most of the research to support this belief has been based on cross-country macroeconomic outcomes, and it was not able to pin down the underlying mechanism through which creditor rights and shareholder protection affect real economic outcomes. In Vintage Capital and Creditor Protection (NBER Working Paper No. 15735), Efraim Benmelech and Nittai Bergman attempt to fill this gap by studying the airline industry, using a sample that includes most of the aircraft in the world (489,916 air-craft-year observations), which covers 5,987 operators in 129 countries over the years 1978-2003.
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