The Value of Judicial Independence: Evidence from 18th Century England
36 Pages Posted: 9 Feb 2004
There are 2 versions of this paper
The Value of Judicial Independence: Evidence from 18th Century England
The Value of Judicial Independence: Evidence from 18th Century England
Date Written: January 2004
Abstract
This paper assesses the impact of judicial independence on equity markets. North and Weingast (1989) argue that judicial independence and other institutional changes inaugurated by the Glorious Revolution of 1688-89 allowed the English government credibly to commit to repay sovereign debt and more generally to protect contractual and property rights. Although they provide some supporting empirical evidence, they do not investigate the effect of judicial independence separately from that of other institutional innovations. This paper is the first to attempt to do so. We look at share price movements at critical points in the passage of the 1701 Act of Settlement and other events which gave judges greater security of tenure and higher salaries. Our results suggest that giving judges tenure during good behavior had a large and statistically significant positive impact on share prices, while salary increases and other improvements to judicial independence had impacts which were consistently positive, but not individually statistically significant.
Keywords: Judicial independence, Glorious Revolution, law and finance
JEL Classification: H11, K40, N43
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
By Andrei Shleifer and Robert W. Vishny
-
By Simeon Djankov, Rafael La Porta, ...
-
By Simeon Djankov, Florencio Lopez De Silanes, ...
-
By Simeon Djankov, Rafael La Porta, ...
-
The Invisible Hand and the Grabbing Hand
By Timothy Frye and Andrei Shleifer
-
By Juan Carlos Botero, Simeon Djankov, ...
-
By Juan Carlos Botero, Simeon Djankov, ...
-
Governance Matters Iii: Governance Indicators for 1996-2002
By Daniel Kaufmann, Aart Kraay, ...