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Does Judicial Quality Shape Economic Activity? Evidence from a Judicial Reform in India

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Author Info
Matthieu Chemin

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Abstract

This paper investigates the impact of judiciaries on firms' contracting behaviour and economic performance. In 2002, the Code of Civil Procedure Amendment Act was enacted in India to facilitate speedy disposal of civil suits. Some State High Courts hal already enacted some of the amendments contained in this reform a long time ago. This spatial variation in the reform's implementation is used to identify the effect of judicial quality on firm's behavior. Using small informal firm data, I find that the reform led to fewer breaches of contract, encouraged investment, facilitated access to finance, and expanded rental markets.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 0725.

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Date of creation: 2007
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Handle: RePEc:lvl:lacicr:0725

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Related research
Keywords: Law and economics; Institutions; Courts; Contracts; Industrial Organisation; Economic Growth; Industrial Performance;

Find related papers by JEL classification:
K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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