Can judicial reform drive economic growth? early credit market signals from Mexico

Can a judicial reform reshape the way credit flows through an economy? That is the question Mexico is now confronting after passing a sweeping transformation of its legal system in October 2024. While public attention has focused on eye-catching proposals, like electing judges by popular vote or restructuring the Supreme Court, a more economically consequential question simmers beneath the surface: will this legal reform alter how banks, borrowers, and markets behave? A trustworthy, efficient judiciary makes it easier to enforce contracts, which reduces credit risk. La Porta et al. (1998) and Djankov et al. (2003) show how stronger courts are tied to deeper credit markets. But these gains don't hinge only on new rules, they also ride on expectations. If lenders expect that the courts will improve, even before a single ruling is issued, behavior may begin to shift. This essay explores whether that shift is already under way in Mexico's credit landscape. This paper is, to our knowledge, the first to document early descriptive and expectational evidence from Mexico's 2024 judicial reform. Unlike prior work focused on long-term impacts, we highlight real-time credit market responses in the immediate aftermath of a major legal overhaul. Our analysis is descriptive and exploratory. We track credit aggregates and survey signals around the reform, aiming to capture early shifts in expectations rather than causal identification. These findings should be read as preliminary evidence to be revisited as longer data series emerge.