Private credit in 129 countries

Abstract

We investigate how timeliness in enforcing legal contracts affects economic growth across countries. We focus on judicial timeliness as a proxy for courts’ performance in a large panel of 169 countries over the 2004–2019 period. We show that, by raising uncertainty and promoting opportunistic behaviors in business transactions, slower courts hinder economic development. The relationship is robust to diverse model specifications and appears stronger for business environments more heavily relying on judiciaries such as economies undergoing rapid growth, countries characterized by low human capital and civil law jurisdictions.