Courts Redux: Micro-evidence From India
Uploaded: 7 months ago; Last updated: 6 months ago ; Date of Publication: 24-January-2021
2010 - 2018
Courts play a central role in enforcing contracts and property rights, which supports the development of the formal financial sector, investment, and economic growth. Long lags in trial resolution can increase uncertainty and transaction costs that prevent effective contracting and weaken de facto rights. While this is well supported in theory there is little micro-empirical evidence on the day-to-day functioning of courts anywhere, let alone in the context of a developing economy.
How does the ability of trial courts in resolving disputes on time affect local credit market and firm behavior? I provide an answer to this question using data generated from 6 million trial records across 195 district courts in India, merged with local-level bank lending and firms’ balance sheets.