Legal Reform and Loan Repayment: The Microeconomic Impact of Debt Recovery Tribunals in India

Sujata Visaria
Authors registered in the RePEc Author Service: Sujata Visaria and Sujata Visaria

American Economic Journal: Applied Economics, 2009, vol. 1, issue 3, 59-81

Abstract: In 1993, the Indian government introduced debt recovery tribunals to speed up the resolution of debt recovery claims larger than a threshold. This paper exploits the staggered introduction of tribunals across states and the link between overdues and claim size to implement a differences-in-differences strategy on project loan data. It finds that the tribunals reduced delinquency for the average loan by 28 percent. They also lowered the interest rates charged on larger loans, holding constant borrower quality. This suggests that the speedier processing of debt recovery suits can lower the cost of credit. (JEL G21, K41, O16, O17)

JEL-codes: G21 K41 O16 O17 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/app.1.3.59
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Citations: View citations in EconPapers (118)

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Related works:
Working Paper: Legal Reform and Loan Repayment: The Microeconomic Impact of Debt Recovery Tribunals in India (2006)
Working Paper: Legal Reform and Loan Repayment:The Microeconomic Impact of Debt Recovery Tribunals in India (2006)
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