Formalizing Dispute Resolution: Effects of Village Courts in Bangladesh

Martin Mattsson and Ahmed Mobarak

No 20265, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Dispute resolution in low-income countries is typically done by either a costly and slow formal court or an informal institution without state-sanctioned enforcement powers. Can access to justice be increased by combining the best aspects of formal and informal institutions? We evaluate the effects of “Village Courts†(VCs) in rural Bangladesh using a large-scale field experiment. The introduction of VCs more than doubles the share of disputes resolved in state-sanctioned courts, but an informal institution called shalish remains dominant. There is some substitution from shalish to VCs, but congestion in higher-level courts, village social dynamics, and economic activity remain unaffected.

Keywords: Courts; Institutional change (search for similar items in EconPapers)
JEL-codes: K4 O17 P48 (search for similar items in EconPapers)
Date: 2025-05
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