Mind the Contagion, Your Honour

Subramanian, K and Tantri, P L and Nishesh, N and Yerabati, M (2020) Mind the Contagion, Your Honour. Working Paper. SSRN.

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Although court judgments on economic issues are frequent, their economic impact remains understudied. Unlike institutional reforms and laws studied extensively by law and finance literature, they are not publicly debated, not passed by elected legislators, and do not always take full economic implications into account. Studying an unexpected verdict of the Supreme Court of India that retrospectively cancelled allocation of coal blocks to firms, we find evidence of contagion through banks associated with affected firms. Such banks reduce lending to their borrowers who, subsequently, contract operations and investments, and default more. Night lights activity suggests broad-based economic slowdown after the judgment.

Item Type: Monograph (Working Paper)
Subjects: Finance
Date Deposited: 05 Jul 2020 05:25
Last Modified: 05 Jul 2020 05:25
URI: https://eprints.exchange.isb.edu/id/eprint/1376

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