حفاظت از بستانکار و توسعه سیستم بانکداری در هند

We use cointegration analysis of a new longitudinal legal dataset to show that strengthening creditor rights in India during the 1990s and 2000s led to an increase in bank credit, supporting the view that legal systems can shape financial development.

A substantial body of work has been devoted in recent years to the claim that legal systems shape financial outcomes. In particular, the content of laws protecting shareholder and creditor interests has been shown to be associated with cross-national variations in stock market development and private credit respectively (La Porta et al., 1998 and Djankov et al., 2007). However, these findings largely rest on the analysis of cross-sectional data. As such, they are subject to a number of limitations, in particular the possibility that changes to legal rules are endogenous to national contexts and macroeconomic trends (Rodrik, 2005). One of the main obstacles to resolving the issue of endogeneity has, until recently, been the absence of reliable time series. This has now been addressed by the construction of longitudinal datasets which measure changes in the law over several decades (Lele and Siems, 2007, Deakin et al., 2007 and Armour et al., 2009). The number of observations in these datasets and the length of the time series involved make it possible to use econometric methods that tackle the problem of endogeneity. In this paper we introduce one of these new datasets, the creditor protection index (CPI), and analyse it to study the effects of changes in creditor rights in India on banking development.

Previous studies of the impact of legal change on financial markets, even when they used time-series data, were not able to overcome the problem that legal change may be endogenous to the economic cycle (Djankov et al., 2007: 323). In this paper we have shown how legal datasets covering a long time series can be combined with cointegration analysis to throw new light on this question. We saw, firstly, that legal reforms which strengthened creditor protection in India in the 1990s and 2000s were positively associated with banking development, measured by bank credit in relation to GDP per capita; secondly, that this association operated independently of trends in stock market development and GDP growth; and, thirdly, that the direction of causation ran from legal reforms to the growth of bank credit, rather than the reverse. However, when it comes to laws protecting secured credit, there is evidence of bi-directional causality between legal and banking sector development. This indicates that the banking industry, as it grows in size relative to the rest of the economy, is able to exert influence on the evolution of laws that protect secured credit more effectively. Although India is a common law system, we cannot conclude from our analysis that its legal origin was, as such, the driver of legal change. That would require a deeper analysis of relevant political and institutional forces (see Armour and Lele, 2009). We have, however, seen that legal change can be a significant factor, in its own right, in shaping financial outcomes; and, specifically, that changes to the law governing the enforcement of security interests may be an important means of encouraging bank lending in a developing country context.