Law and Finance Matter: Lessons from Externally Imposed Courts

• 成果类型: Article
• 署名作者: Brown, James R.; Cookson, J. Anthony; Heimer, Rawley Z.
• 署名单位: Iowa State University; University of Colorado System; University of Colorado Boulder; Federal Reserve System - USA; Federal Reserve Bank - Cleveland
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhw030
• 发表日期: 2017
• 页码: 1019
• 关键词: PROPERTY-RIGHTS; productivity evidence; stock markets; GROWTH; banks; determinants; institutions; constraints; origins; access

摘要

This paper provides novel evidence on the real and financial market effects of legal institutions. Our analysis exploits persistent and externally imposed differences in court enforcement that arose when the U.S. Congress assigned state courts to adjudicate contracts on a subset of Native American reservations. Using area-specific data on small business lending, we find that reservations assigned to state courts, which enforce contracts more predictably than tribal courts, have stronger credit markets. Moreover, the law-driven component of credit market development is associated with significantly higher per capita income, with stronger effects in sectors that depend more on external financing.