Does Merging Small Bankruptcy Courts Increase Their Efficiency?

We estimate the impact of a 2009 reform that merged small bankruptcy courts on the qualityof their rulings. A conceptual framework enables us to link difference-in-difference estimatesto the impact of the reform on Type 1 errors (restructuring a non-viable firm) and Type 2errors (liquidating a viable firm). We apply this framework to an (almost) exhaustive sampleof 600,000 bankruptcy cases in France that started between 2000 and 2019. The reformunambiguously reduces Type 1 errors while having no impact on Type 2 errors. Post-mergercourt behavior is determined more by that of the absorbing court than by that of theabsorbed one.