TY  - RPRT
        AU  - Chakraborty, Tanika
AU  - Mukherjee, Anirban
AU  - Saha, Sarani
AU  - Shukla, Divya
        TI  - Caste, Courts and Business
        PY  - 2022/Jan/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15037
        UR  - https://www.iza.org/index.php/publications/dp15037
        AB  - We study the role of formal institutions of contract enforcement in facilitating investments in small and medium firms(MSME). In a framework where established entrepreneurs can enforce contracts informally using their network ties and hierarchical advantage, we argue that an efficient formal judiciary helps entrepreneurs without any ties to informal business networks, disproportionately more. We test our theoretical prediction using a novel administrative panel-data from Indian courts and the nationally representative MSME survey data.
Empirically, we treat entrepreneurs from disadvantaged castes (SC-ST) as those without traditional business-network ties. We find that improvement in court quality has a disproportionately larger impact on the investment decisions of SC-ST entrepreneurs. On average, if the time taken for a court to clear all existing cases reduces by 1 year, the initial gap in the probability of investing, between SC-ST and other entrepreneurs, gets reduced by 0.6-0.7 percentage points.
        KW  - MSME
KW  - Duration Index
KW  - judiciary
KW  - entrepreneurship
        ER  -