Judicial Delocalization and Firm-level Total Factor Productivity:Evidence from the Establishment of Circuit Courts by the Supreme People's Court
High-quality rule of law is an important safeguard for accelerating the formation and development of China's new quality productive forces.The problem of"localization"of justice is not conducive to achieving judicial justice,is a manifestation of local protection,and obstructs the effective allocation of market resources.The establishment of circuit courts by the Supreme People's Court is an important judicial system reform for this purpose in China.This paper uses a staggered DID model to explore the impact of the establishment of circuit courts on the firm-level total factor productivity(TFP),examing the effect of judicial"delocalization"institutional innovation on the efficiency of resource allocation from the micro-enterprise level.The results show that:(1)Circuit courts significantly improve TFP,which is equivalent to 2.1％of the average TFP of sample firms.(2)This positive effect is more obvious for firms with state-ownership,large-scale private-ownership and government-subsidized,those are more likely to benefit from local protection.(3)Alleviating regional market segmentation,improving the efficiency of regional contract execution and restraining firms'over-investment are the possible mechanisms for circuit courts to improve firms'TFP.(4)Whether the location of a firm is the location of the circuit court does not affect the promotion effect of the circuit court on the firms'TFP,which to some extent indicates that the circuit courts'"residence+circuit region"form is effective.This paper provides new evidence for the argument that promoting the construction of the rule of law in China is conducive to high-quality economic development.Based on the findings of our research,we propose the following policy recommendations.Firstly,on the path of building the rule of law in China,we should continue to deepen the reform of the judicial system and institutions,further safeguard judicial fairness,and enhance the quality of justice.Secondly,in advancing the strategy of high-quality economic development,great emphasis should be placed on the development of new quality productive forces,while implementing technological innovations and driving industrial transformation,it is essential to enhance the efficiency of resource allocation among market micro-entities.Thirdly,in the process of accelerating the construction of a unified national market,we should fundamentally address the relationship between the government and the market in terms of systems and mechanisms,and effectively ensure that the market plays a decisive role in resource allocation.
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