Legal Reform and Loan Repayment: The Microeconomic Impact of Debt Recovery Tribunals in India
AbstractIn 1993, the Indian government introduced debt recovery tribunals to speed up the resolution of debt recovery claims larger than a threshold. This paper exploits the staggered introduction of tribunals across states and the link between overdues and claim size to implement a differences-in-differences strategy on project loan data. It finds that the tribunals reduced delinquency for the average loan by 28 percent. They also lowered the interest rates charged on larger loans, holding constant borrower quality. This suggests that the speedier processing of debt recovery suits can lower the cost of credit. (JEL G21, K41, O16, O17)
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Journal: Applied Economics.
Volume (Year): 1 (2009)
Issue (Month): 3 (July)
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ana Carla A. Costa & João M. P. De Mello, 2008.
"Judicial Risk and Credit Market Performance: Micro Evidence from Brazilian Payroll Loans,"
in: Financial Markets Volatility and Performance in Emerging Markets, pages 155-184
National Bureau of Economic Research, Inc.
- Ana Carla A. Costa & Joao M.P. De Mello, 2006. "Judicial Risk and Credit Market Performance: Micro Evidence from Brazilian Payroll Loans," NBER Working Papers 12252, National Bureau of Economic Research, Inc.
- Chan, Yuk-Shee & Thakor, Anjan V, 1987.
" Collateral and Competitive Equilibria with Moral Hazard and Private Information,"
Journal of Finance,
American Finance Association, vol. 42(2), pages 345-63, June.
- Yuk-Shee Chan & Anjan V. Thakor, 2004. "Collateral and Competitive Equilibria with Moral Hazard and Private Information," Finance 0411019, EconWPA.
- Bardhan, Pranab & Udry, Christopher, 1999. "Development Microeconomics," OUP Catalogue, Oxford University Press, number 9780198773719, September.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002.
"How Much Should We Trust Differences-in-Differences Estimates?,"
NBER Working Papers
8841, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
- Madestam, Andreas, 2014.
"Informal finance: A theory of moneylenders,"
Journal of Development Economics,
Elsevier, vol. 107(C), pages 157-174.
- Leora Klapper, 2011. "Saving Viable Businesses : The Effect of Insolvency Reform," World Bank Other Operational Studies 11056, The World Bank.
- Ulf von Lilienfeld-Toal & Dilip Mookherjee & Sujata Visaria, 2009.
"The Distributive impact of reforms in credit enforcement: Evidence from Indian debt recovery tribunals,"
Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers
09-03, Indian Statistical Institute, New Delhi, India.
- Ulf von Lilienfeld‐Toal & Dilip Mookherjee & Sujata Visaria, 2012. "The Distributive Impact of Reforms in Credit Enforcement: Evidence From Indian Debt Recovery Tribunals," Econometrica, Econometric Society, vol. 80(2), pages 497-558, 03.
- Dilip Mookherjee & Ulf von Lilienfeld-Toal & Sujata Visaria, 2010. "The Distributive Impact Of Reforms In Credit Enforcement: Evidence From Indian Debt Recovery Tribunals," Boston University - Department of Economics - Working Papers Series WP2010-034, Boston University - Department of Economics.
- Ulf von Lilienfeld-Toal & Dilip Mookherjee & Sujata Visaria, 2009. "The Distributive Impact of Reforms in Credit Enforcement: Evidence from Indian Debt Recovery Tribunals," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-183, Boston University - Department of Economics.
- Dilip Mookherjee & Sujata Visaria & Ulf Lilienfeld Toal, 2010. "The Distributive Impact of Reforms in Credit Enforcement: Evidence from Indian Debt Recovery Tribunals," Working Papers id:2613, eSocialSciences.
- Ileana Ashrafzadeh - Nișulescu & Marușa Beca, 2013. "The Corporate Insolvency’s Evolution in the EU and India in the Period 2007-2012 Classification-JEL:," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(6), pages 15, December.
- Allen, Franklin & Chakrabarti, Rajesh & De, Sankar & Qian, Jun “QJ” & Qian, Meijun, 2012.
"Financing firms in India,"
Journal of Financial Intermediation,
Elsevier, vol. 21(3), pages 409-445.
- Badev, Anton & Beck, Thorsten & Vado, Ligia & Walley, Simon, 2014. "Housing finance across countries : new data and analysis," Policy Research Working Paper Series 6756, The World Bank.
- Wenli Li & Ishani Tewari & Michelle J. White, 2014. "Using Bankruptcy to Reduce Foreclosures: Does Strip-down of Mortgages Affect the Supply of Mortgage Credit?," NBER Working Papers 19952, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.