Fair and square: The impact of judicial independence on entrepreneurship

Laifeng Yang, Qing Sophie Wang and Shaojie Lai

Finance Research Letters, 2023, vol. 55, issue PB

Abstract: This paper investigates the effects of judicial independence on entrepreneurship by exploiting the staggered establishment of Circuit Courts (CCs) in China. We show that local entrepreneurship activities increase by 4.19% after the introduction of CCs. Our results hold after a battery of robustness tests. Reduced financial constraints could be a plausible channel through which CCs promote entrepreneurship. The positive effect of CCs is more pronounced in highly corrupted areas. Overall, this study shows that the judicial independence reform aimed at reducing local protectionism fosters entrepreneurship in a typical emerging market.

Keywords: Judicial independence; Circuits courts; Entrepreneurship; Financial constraints (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003264

DOI: 10.1016/j.frl.2023.103954

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