Working Paper: NBER ID: w15631
Authors: Charles Yuji Horioka; Shizuka Sekita
Abstract: In this paper, we conduct an empirical analysis of the impact of better judicial enforcement on the probability of being credit rationed, loan size, and the probability of bankruptcy using household-level data from the Japanese Panel Survey of Consumers, conducted by the Institute for Research on Household Economics, in conjunction with judicial data by court district on trial length and the ratio of the number of pending civil trials to the number of incoming civil trials. Contrary to the predictions of the existing theory, we find that better judicial enforcement increases the probability of being credit rationed and decreases loan size. Furthermore, we find that better judicial enforcement increases the probability of bankruptcy, a result that is consistent with lax screening effects.
Keywords: Judicial Enforcement; Credit Rationing; Loan Size; Bankruptcy
JEL Codes: D12; G21; G33; K12; K41; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| better judicial enforcement (K40) | probability of being credit rationed (E51) |
| better judicial enforcement (K40) | loan size (G51) |
| better judicial enforcement (K40) | probability of bankruptcy (G33) |