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Impact of judgment readability on financial crimes

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  • Pathak, Jalaj

Abstract

Using NLP techniques, we extract the financial judgments from the overall set of supreme court judgments and find a one-unit increase in readability, implying harder-to-comprehend supreme court judgments, is significantly associated with a 2% increase in financial crimes for the next year. The results hold true for different categories of financial crimes and are robust to the other proxies for readability. This is in line with the theories of how the comprehensibility of the judgments often leaves scope for debate and calls for easier-to-read and comprehensible judgments so that such loopholes can be avoided.

Suggested Citation

  • Pathak, Jalaj, 2025. "Impact of judgment readability on financial crimes," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325000443
    DOI: 10.1016/j.frl.2025.106779
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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