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- Title
Law and Finance Matter: Lessons from Externally Imposed Courts.
- Authors
Brown, James R.; Cookson, J. Anthony; Heimer, Rawley Z.
- Abstract
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.
- Subjects
UNITED States; BOND market laws; STATE courts; NATIVE American courts; LEGAL status of Native Americans; PUBLIC Law 280 (U.S. : 1953); JURISDICTION
- Publication
Review of Financial Studies, 2017, Vol 30, Issue 3, p1019
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhw030