Structural or cyclical decline: Commercial court cases in the Netherlands

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. • We observe a decline in the volume of commercial court cases in the Netherlands between 2010 and 2020. • This decline in commercial court cases seems to be both structural and cyclical. • Case value, which can be seen as a proxy for complexity, has also increased since then. • Interviews with experts indicate that the expansion of new technologies, which increase information availability, and increased firm centralization are important factors contributing to this decrease. • Case type plays an important role: debt collection is primarily cyclical, while contested commercial disputes such as tort are structurally declining.