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Does Judicial Quality Shape Economic Activity? Evidence from a Judicial Reform in India

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  • Matthieu Chemin

Abstract

This paper investigates the impact of judiciaries on firms' contracting behaviour and economic performance. In 2002, the Code of Civil Procedure Amendment Act was enacted in India to facilitate speedy disposal of civil suits. Some State High Courts hal already enacted some of the amendments contained in this reform a long time ago. This spatial variation in the reform's implementation is used to identify the effect of judicial quality on firm's behavior. Using small informal firm data, I find that the reform led to fewer breaches of contract, encouraged investment, facilitated access to finance, and expanded rental markets.

Suggested Citation

  • Matthieu Chemin, 2007. "Does Judicial Quality Shape Economic Activity? Evidence from a Judicial Reform in India," Cahiers de recherche 0725, CIRPEE.
    • Handle: RePEc:lvl:lacicr:0725
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    Cited by:

    1. Josemaria Gabriel Agregado & Jose Maria Marella & Toby Monsod, 2015. "Does judicial quality matter for firm performance?," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 51(1), pages 77-94, June.

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    More about this item

    Keywords

    Law and economics; Institutions; Courts; Contracts; Industrial Organisation; Economic Growth; Industrial Performance;
    All these keywords.

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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