Type: Job Market Paper, 2019
This paper aims to study the causal relationship between court efficiency and firm level outcomes using newly available micro-data from district courts in India. We model court efficiency along a number of dimensions, including annual speed of resolution, trial duration, and plausible quality metrics including revisions and appeals. Next, we merge these measures with firm level outcomes including annual financials and production. To address the concerns of credible identification, we exploit plausible exogenous variations along two margins. First, we make use of deterministic rules that define the jurisdiction of a case and use this to study the causal effects of court efficiency on the outcomes of firms that are already litigating. Along the second margin, we exploit variation in judge occupancy - one of the main inputs into the court production function - arising out of a system of rotating transfers of judges across courts within a state, to study the effects on all firms that take into account the institutional quality in their decision making.
Recommended citation: Rao, Manaswini. (2019). "Court Efficiency and Firms: Evidence from District Courts in India." Job Market Paper. 1(3). http://manaswinirao.com/files/paper3.pdf