Law and Availability of Credit: Evidence from India
Francis Rathinam () and
Raja Angara Viswasundara
Additional contact information
Raja Angara Viswasundara: University of Hyderabad, Hyderabad, India
Asian Journal of Law and Economics, 2010, vol. 1, issue 2, pages 1-26
Law and Finance literature shows that effective creditor and investor protection leads to vibrant financial markets. This paper hypothesizes that supporting laws that lead to swift enforcement and reduce the cost of availing legal services would help implement the law effectively. The causal relationship between the procedural law and credit in India is explored using both macro and micro econometric techniques. Using a newly constructed time series index of procedural law innovations in India, this paper tries to identify the direction of causality and also explore the possible channels of impact in the Indian context. The results suggest that there is a long run causal relationship between law and finance, and the channel of impact is debt accumulation rather than total factor productivity. At a micro-level, using the staggered introduction of the Debt Recovery Tribunals (DRTs), a fast track court for financial disputes involving banks, we show that the procedural law innovation in India has resulted in higher disbursal of loans to the private sector by the banks.
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://www.degruyter.com/view/j/ajle.2010.1.2/ajle ... .1014.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: /RePEc:bpj:ajlecn:v:1:y:2010:i:2:n:2
Ordering information: This journal article can be ordered from
Access Statistics for this article
Asian Journal of Law and Economics is currently edited by Noriyuki Yanagawa
More articles in Asian Journal of Law and Economics from De Gruyter
Series data maintained by Peter Golla ().