Judicial quality, contract intensity and exports: Firm-level evidence

Yongjin Wang, Yanling Wang and Kunwang Li

China Economic Review, 2014, vol. 31, issue C, 32-42

Abstract: Judicial quality affects firms' exports through its efficiency in settling business contract disputes (transaction costs). Firms in regions with better judicial quality will have a comparative advantage in exporting the goods that source heavily relationship-specific intermediate inputs (contract-intensive), due to cost saving from efficient dispute settlement system. We study this issue using export data of over 77,000firms across 30 provinces in China. We explicitly control for firm heterogeneity of self-selection into exporters, and firm heterogeneity in their responses to judicial quality. We find that firms operating in provinces with better judicial quality export more products that require relationship-specific intermediate inputs, and judicial quality is most important for foreign-owned firms.

Keywords: Judicial quality; Contract intensity; Firm exports (search for similar items in EconPapers)
JEL-codes: F1 L1 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:31:y:2014:i:c:p:32-42

DOI: 10.1016/j.chieco.2014.08.002

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