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Fair and square: The impact of judicial independence on entrepreneurship

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  • Yang, Laifeng
  • Wang, Qing Sophie
  • Lai, Shaojie

Abstract

This paper investigates the effects of judicial independence on entrepreneurship by exploiting the staggered establishment of Circuit Courts (CCs) in China. We show that local entrepreneurship activities increase by 4.19% after the introduction of CCs. Our results hold after a battery of robustness tests. Reduced financial constraints could be a plausible channel through which CCs promote entrepreneurship. The positive effect of CCs is more pronounced in highly corrupted areas. Overall, this study shows that the judicial independence reform aimed at reducing local protectionism fosters entrepreneurship in a typical emerging market.

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  • Yang, Laifeng & Wang, Qing Sophie & Lai, Shaojie, 2023. "Fair and square: The impact of judicial independence on entrepreneurship," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003264
    DOI: 10.1016/j.frl.2023.103954
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    References listed on IDEAS

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    3. Zheng, Panpan & Li, Zhen & Zhuang, Ziyin & Lin, Boyuan, 2024. "Judicial independence and growth investors' decisions," Finance Research Letters, Elsevier, vol. 62(PB).
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    5. Li, Zhen & Zheng, Panpan & Xie, Huobao, 2024. "Judicial digital intellectualization and corporate online misconduct," Finance Research Letters, Elsevier, vol. 62(PA).
    6. Liu, Yurou, 2023. "Judicial independence and crash risk: Evidence from a natural experiment in China," Journal of Corporate Finance, Elsevier, vol. 83(C).

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