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Judicial quality and regional firm performance: The case of Indian states

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  • Chakraborty, Pavel

Abstract

Higher quality institutions help a firm to invest in institutional-dependent inputs, which might affect a firm's performance. I use data for Indian manufacturing that matches state-by-state firm-level data with state-by-state data on particularly important institution – Judicial quality. Results show that judicial quality is a significant determinant of higher firm performance – both for exports and domestic sales. My most conservative estimate suggests that a 10% increase in judicial quality of a region helps to increase the sales of a firm by 1–2%. I explicitly control for the ‘selection’ effect by using a two-step Average Treatment Effect (ATE) procedure. The results also support my initial findings. My results are robust to a battery of robustness checks.

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  • Chakraborty, Pavel, 2016. "Judicial quality and regional firm performance: The case of Indian states," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 902-918.
    • Handle: RePEc:eee:jcecon:v:44:y:2016:i:4:p:902-918
    DOI: 10.1016/j.jce.2016.07.001
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    4. Falavigna, G. & Ippoliti, R., 2021. "Reform policy to increase the judicial efficiency in Italy: The opportunity offered by EU post-Covid funds," Journal of Policy Modeling, Elsevier, vol. 43(5), pages 923-943.
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    12. Pavithra Manivannan & Susan Thomas & Bhargavi Zaveri, 2022. "Evaluating contract enforcement by courts in India: a litigant's lens," Working Papers 16, xKDR.
    13. Roberto Ganau & Andrés Rodríguez‐Pose, 2019. "Do high‐quality local institutions shape labour productivity in Western European manufacturing firms?," Papers in Regional Science, Wiley Blackwell, vol. 98(4), pages 1633-1666, August.
    14. Kapri, Kul, 2021. "Court fairness and firm level export decisions," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 269-277.
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    18. Panayotis Kapopoulos & Anastasios Rizos, 2024. "Judicial efficiency and economic growth: Evidence based on European Union data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 71(1), pages 101-131, February.

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    More about this item

    Keywords

    Judicial quality; Intermediate inputs; Firm performance; Exports; Domestic sales;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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