Judicial quality and regional firm performance: The case of Indian states

Pavel Chakraborty

Journal of Comparative Economics, 2016, vol. 44, issue 4, 902-918

Abstract: Higher quality institutions help a firm to invest in institutional-dependent inputs, which might affect a firm's performance. I use data for Indian manufacturing that matches state-by-state firm-level data with state-by-state data on particularly important institution – Judicial quality. Results show that judicial quality is a significant determinant of higher firm performance – both for exports and domestic sales. My most conservative estimate suggests that a 10% increase in judicial quality of a region helps to increase the sales of a firm by 1–2%. I explicitly control for the ‘selection’ effect by using a two-step Average Treatment Effect (ATE) procedure. The results also support my initial findings. My results are robust to a battery of robustness checks.

Keywords: Judicial quality; Intermediate inputs; Firm performance; Exports; Domestic sales (search for similar items in EconPapers)
JEL-codes: D21 F1 F14 O43 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:44:y:2016:i:4:p:902-918

DOI: 10.1016/j.jce.2016.07.001

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