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Formalizing Dispute Resolution: Effects of Village Courts in Bangladesh

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  • Mattsson, Martin
  • Mobarak, Ahmed

Abstract

Dispute resolution in low-income countries is typically done by either a costly and slow formal court or an informal institution without state-sanctioned enforcement powers. Can access to justice be increased by combining the best aspects of formal and informal institutions? We evaluate the effects of “Village Courts†(VCs) in rural Bangladesh using a large-scale field experiment. The introduction of VCs more than doubles the share of disputes resolved in state-sanctioned courts, but an informal institution called shalish remains dominant. There is some substitution from shalish to VCs, but congestion in higher-level courts, village social dynamics, and economic activity remain unaffected.

Suggested Citation

  • Mattsson, Martin & Mobarak, Ahmed, 2025. "Formalizing Dispute Resolution: Effects of Village Courts in Bangladesh," CEPR Discussion Papers 20265, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20265
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    File URL: https://cepr.org/publications/DP20265
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    Keywords

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    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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