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

CIRPEE Working Paper No. 07-25

46 Pages Posted: 3 Oct 2007  

Matthieu Chemin

University of Quebec at Montreal (UQAM)

Date Written: September 2007

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 had 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.

Keywords: Law and economics, Institutions, Courts, Contracts, Industrial Organisation, Economic Growth, Industrial Performance

JEL Classification: K10, K12, K40, K42, O12, O17, L14, D23, C72

Suggested Citation

Chemin, Matthieu, Does Judicial Quality Shape Economic Activity? Evidence from a Judicial Reform in India (September 2007). CIRPEE Working Paper No. 07-25. Available at SSRN: https://ssrn.com/abstract=1018897 or http://dx.doi.org/10.2139/ssrn.1018897

Matthieu Chemin (Contact Author)

University of Quebec at Montreal (UQAM) ( email )

PB 8888 Station DownTown
Succursale Centre Ville
Montreal, Quebec H3C3P8
Canada

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