Decoding the Code of Civil Procedure: Do Judiciaries Matter for Growth?

Abstract

This paper attempts to measure the causal impact of the speed of judiciaries on economic activity by using two novel instrumental variables measuring judicial procedural ambiguity and complexity. Firs, I find that temporally exogenous conflicting judicial decisions taken in India due to the Code of Civil Procedure's ambiguity lead to higher expected trial duration as judges are required to spend considerable time in choosing between several conflicting views. Second, I find that Indian High Court amendments complicating procedures to treat a case are related to higher trial duration. By using spatial and temporal variations in the occurrence of conflicting decisions and enactment of amendments as instrumental variables, I am able to measure the impact of judicial speed on credit markets, agricultural development and manufacturing performance.