Structural or cyclical decline: Commercial court cases in the Netherlands

Abstract

In the Netherlands, the number of commercial court cases has been declining since the end of the 2008 financial crisis. A similar decline is observed in other countries. The reasons for this decline are not well understood. Therefore, we investigate to what extent this decline is related to the business cycle and to what extent it is related to structural factors. To address this question, we use administrative data provided by the Dutch judiciary that enables us to separate cases by type of dispute. This disaggregation makes it possible to differentiate a type of case that is closely linked to the business cycle (debt collection) from a type that is not (tort). We perform regressions on the volume of these different types of cases while controlling for firms’ fixed effects. Our results indicate that, while the decline is the result of a combination of business cycle and structural factors, structural factors dominate in contentious litigation. The interviews with experts indicate that the structural decline is due to both the expansion of new technologies that increased information availability and the increased centralization of firms.