The Degree of Judicial Enforcement and Credit Markets: Evidence from Japanese Household Panel Data

30 Pages Posted: 11 Jan 2010 Last revised: 19 Mar 2022

See all articles by Charles Yuji Horioka

Charles Yuji Horioka

Kobe University; National Bureau of Economic Research; Asian Growth Research Institute; Osaka University

Shizuka Sekita

Kyoto Sangyo University

Multiple version iconThere are 3 versions of this paper

Date Written: January 2010

Abstract

In this paper, we conduct an empirical analysis of the impact of better judicial enforcement on the probability of being credit rationed, loan size, and the probability of bankruptcy using household-level data from the Japanese Panel Survey of Consumers, conducted by the Institute for Research on Household Economics, in conjunction with judicial data by court district on trial length and the ratio of the number of pending civil trials to the number of incoming civil trials. Contrary to the predictions of the existing theory, we find that better judicial enforcement increases the probability of being credit rationed and decreases loan size. Furthermore, we find that better judicial enforcement increases the probability of bankruptcy, a result that is consistent with lax screening effects.

Suggested Citation

Horioka, Charles Yuji and Sekita, Shizuka, The Degree of Judicial Enforcement and Credit Markets: Evidence from Japanese Household Panel Data (January 2010). NBER Working Paper No. w15631, Available at SSRN: https://ssrn.com/abstract=1533665

Charles Yuji Horioka (Contact Author)

Kobe University ( email )

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Osaka University ( email )

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HOME PAGE: http://www.rieb.kobe-u.ac.jp

Shizuka Sekita

Kyoto Sangyo University ( email )

Kyoto City
Japan

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