The Distributive Impact of Reforms in Credit Enforcement: Evidence from Indian Debt Recovery Tribunals

61 Pages Posted: 8 Apr 2011

See all articles by Sujata Visaria

Sujata Visaria

Hong Kong University of Science & Technology (HKUST)

Ulf von Lilienfeld-Toal

Luxembourg School of Finance

Dilip Mookherjee

Boston University - Department of Economics

Date Written: December 16, 2010

Abstract

It is generally presumed that strengthening the legal enforcement of lender rights increases credit access for all borrowers, by expanding the set of incentive-compatible loan contracts. This presumption is based on an implicit assumption of infinitely elastic supply of loans. With inelastic supply, strengthening enforcement generates general equilibrium effects which may reduce credit access for small borrowers, while expanding it for wealthy borrowers. In a firm-level panel, we find evidence of such adverse distributional impacts caused by an Indian judicial reform in the 1990s which increased banks' ability to recover non-performing loans.

Suggested Citation

Visaria, Sujata and Lilienfeld-Toal, Ulf von and Mookherjee, Dilip, The Distributive Impact of Reforms in Credit Enforcement: Evidence from Indian Debt Recovery Tribunals (December 16, 2010). Available at SSRN: https://ssrn.com/abstract=1804406 or http://dx.doi.org/10.2139/ssrn.1804406

Sujata Visaria

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Ulf von Lilienfeld-Toal (Contact Author)

Luxembourg School of Finance ( email )

162a, avenue de la Faïencerie
Luxembourg-Limpertsberg, L-1511
Luxembourg

Dilip Mookherjee

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-4392 (Phone)
617-353-4143 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
65
Abstract Views
641
rank
401,720
PlumX Metrics