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Judicial Efficiency and Firm Productivity: Evidence from a World Database of Judicial Reforms

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  • Matthieu Chemin

    (McGill University, CIREQ, and CIRANO)

Abstract

I assemble and classify a database of judicial reforms funded by foreign aid agencies as either comprehensive (targeting all characteristics of quality, speed, access) or limited reform. A triple difference is used to compare firms in countries with or without judicial reforms, before and after reforms, and in sectors more or less reliant on contract enforcement mechanisms, due to their need for relationship-specific investments. I find that externally financed comprehensive judicial reforms improve perceptions of judiciary efficiency (for all firms) and firm productivity (for sectors relying on relationship-specific investments) by 0.15 and 0.09 (22%) standard deviation, respectively.

Suggested Citation

  • Matthieu Chemin, 2020. "Judicial Efficiency and Firm Productivity: Evidence from a World Database of Judicial Reforms," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 49-64, March.
    • Handle: RePEc:tpr:restat:v:102:y:2020:i:1:p:49-64
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    References listed on IDEAS

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    5. Sultan Mehmood, 2021. "The impact of Presidential appointment of judges: Montesquieu or the Federalists?," Working Papers halshs-03161933, HAL.
    6. Sultan Mehmood, 2020. "Judicial Independence and Development: Evidence from Pakistan," AMSE Working Papers 2041, Aix-Marseille School of Economics, France.
    7. Zhao, Da & Guo, Jingyuan & Yu, Shule & Yu, Litian, 2024. "Tradeoff between local protection and public sector performance: Lessons from judicial fiscal centralization," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 254-278.
    8. Brassiolo, Pablo & Estrada, Ricardo & Fajardo, Gustavo & Martínez-Correa, Julian, 2021. "Family Rules: Nepotism in the Mexican Judiciary," Research Department working papers 1798, CAF Development Bank Of Latinamerica.
    9. Krahé, Max, 2023. "Understanding Italy's stagnation," Papers 277913, Dezernat Zukunft - Institute for Macrofinance, Berlin.
    10. Chemin, Matthieu, 2021. "Can judiciaries constrain executive power? Evidence from judicial reforms," Journal of Public Economics, Elsevier, vol. 199(C).
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    13. Adamu Jibir & Musa Abdu & Farida Bello & Iliya Garba, 2019. "Do Institutions Promote Firm Performance? Evidence from Sub-Saharan Africa," Review of Market Integration, India Development Foundation, vol. 11(3), pages 111-137, December.
    14. Wu, Ziqi & Xiao, Yi & Zhang, Jian & Wu, Jingyi, 2024. "Justice Reform and Entrepreneurship: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1190-1203.
    15. Krahé, Max, 2023. "Italiens Stagnation verstehen," Papers 277907, Dezernat Zukunft - Institute for Macrofinance, Berlin.
    16. Sultan Mehmood, 2020. "Judicial Independence and Development: Evidence from Pakistan," Working Papers halshs-03054106, HAL.
    17. Figueroa, Camila & Iberti, Gonzalo & Riutort, Julio & Wagner, Rodrigo, 2023. "Do firms that state they are financially constrained tend to reinvest more of their profits?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    18. Raffaela Giordano & Sergi Lanau & Pietro Tommasino & Petia Topalova, 2020. "Does public sector inefficiency constrain firm productivity? Evidence from Italian provinces," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 1019-1049, August.
    19. Jean Baptiste Habyarimana & Vikas Kakkar, 2023. "Externally funded trade policy reforms and firm productivity: Evidence from a world database of reforms funded by foreign aid agencies," Kyklos, Wiley Blackwell, vol. 76(2), pages 196-222, May.
    20. Shah, Muhammad Hashim & Xiao, Zuoping & Abdullah,, 2023. "Internal pyramid structure, judicial efficiency, firm-level governance and dividend policy," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 764-785.
    21. Giulia Canzian & Antonella Rita Ferrara, 2021. "Judicial Efficiency and Banks Credit Risk Exposure," CESifo Working Paper Series 8930, CESifo.
    22. Sultan Mehmood, 2021. "The impact of Presidential appointment of judges: Montesquieu or the Federalists?," AMSE Working Papers 2118, Aix-Marseille School of Economics, France.
    23. Chemin, Matthieu & Kimalu, Paul & Newman-Bachand, Simon, 2024. "Courts, Crime and Economic Performance: Evidence from a Judicial Reform in Kenya," Journal of Public Economics, Elsevier, vol. 231(C).
    24. Decarolis, Francesco & Mattera, Gianpiero & Menon, Carlo, 2020. "Delays at the Border: Court Efficiency and Delays in Public Contracts," CEPR Discussion Papers 14856, C.E.P.R. Discussion Papers.

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