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

24 Pages Posted: 12 Jun 2011

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

Osaka University - Graduate School of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: June 2011

Abstract

The length of trials in Japan has become shorter over time. Theory predicts that better judicial enforcement (i.e., faster court proceedings) will decrease the probability of being credit rationed, increase loan size, and increase the probability of bankruptcy. Our estimation results based on micro data from a panel survey of consumers in conjunction with judicial data by court district show that better judicial enforcement increases the probability of being rationed in some cases and decreases loan size (contrary to expectation) but increases the probability of bankruptcy (as expected). Thus, better judicial enforcement facilitates the recovery of loans but may be socially harmful.

Suggested Citation

Horioka, Charles Yuji and Sekita, Shizuka, The Degree of Judicial Enforcement and Credit Markets: Evidence from Japanese Household Panel Data (June 2011). International Review of Finance, Vol. 11, Issue 2, pp. 245-268, 2011, Available at SSRN: https://ssrn.com/abstract=1861765 or http://dx.doi.org/10.1111/j.1468-2443.2010.01123.x

Charles Yuji Horioka (Contact Author)

Kobe University ( email )

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Osaka University ( email )

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Shizuka Sekita

Osaka University - Graduate School of Economics ( email )

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Toyonaka, Osaka, 560-0043
Japan

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