Judicial Quality and Regional Firm Performance:The Case of Indian States

Chakraborty, Pavel (2016) Judicial Quality and Regional Firm Performance:The Case of Indian States. Journal of Comparative Economics, 44 (4). pp. 902-918. ISSN 0147-5967

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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.

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Journal Article
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Journal of Comparative Economics
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09 Jan 2018 09:22
Last Modified:
22 Nov 2022 05:20