TY - JOUR

T1 - Judicial Quality and Regional Firm Performance

T2 - The Case of Indian States

AU - Chakraborty, Pavel

PY - 2016/11

Y1 - 2016/11

N2 - 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.

AB - 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.

KW - Judicial quality

KW - Intermediate inputs

KW - Firm performance

KW - Exports

KW - Domestic sales

U2 - 10.1016/j.jce.2016.07.001

DO - 10.1016/j.jce.2016.07.001

M3 - Journal article

VL - 44

SP - 902

EP - 918

JO - Journal of Comparative Economics

JF - Journal of Comparative Economics

SN - 0147-5967

IS - 4

ER -