COURTS*

SIMEON DJANKOV
RAFAEL LA PORTA
FLORENCIO LOPEZ-DE-SILANES
ANDREI SHLEIFER

In cooperation with Lex Mundi member law firms in 109 countries, we

measure and describe the exact procedures used by litigants and courts to evict a
tenant for nonpayment of rent and to collect a bounced check. We use these data

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to construct an index of procedural formalism of dispute resolution for each
country. We find that such formalism is systematically greater in civil than in
common law countries, and is associated with higher expected duration of judicial
proceedings, less consistency, less honesty, less fairness in judicial decisions, and
more corruption. These results suggest that legal transplantation may have led to
an inefficiently high level of procedural formalism, particularly in developing
countries.

I. INTRODUCTION
A fundamental proposition in economics holds that the secu-
rity of property and the enforcement of contracts are essential for
investment, trade, and ultimately economic growth to come about
[Montesquieu 1748; Smith 1776]. Many institutions serve to se-
cure property and enforce contracts. Some of them are entirely
private, such as reputations and informal discussions among
neighbors, and do not rely on the government [Macaulay 1963;
Galanter 1981; Ellickson 1991]. Other institutions securing prop-
erty and enforcing contracts, such as regulators and courts, are
governmental. Regulatory agencies restrict private conduct that

* We are indebted to Carl E. Anduri, and Melinda L. Eggenberger of Lex

Mundi, Samuel A. Nolen of Richards, Layton and Finger, and Juan Carlos Botero
for extensive cooperation throughout this project; to Erhard Blankenburg, Rich-
ard Epstein, Judge Roger Errera, Charles Fried, Oliver Hart, Roumeen Islam,
Simon Johnson, Louis Kaplow, Bert Kritzer, Lord Justice Law, Atif Mian, Brian
Ostrom, Guy Pfeffermann, Eric Posner, Judge Richard Posner, Mark Ramseyer,
Alan Schwarts, Steven Shavell, Roberta Romano, Jeremy Stein, Ivo Welch, Lord
Woolf, and three anonymous referees for their comments; and to Jose Caballero,
Claudia Cuenca, Theodora Galabova, Mario Gamboa-Cavazos, Olga Ioffe, Alfredo
Larrea, Margaret Michel, Juan Manuel Pinzon, Alejandro Ponce-Rodriguez, Stef-
ka Slavova, Ekaterina Trizlova, and Lihong Wang for excellent research assis-
tance. We have also received considerable input on an earlier draft from Edward
Glaeser and Lawrence Katz. This research was funded by the World Bank, the
International Institute of Corporate Governance at Yale School of Management,
and conducted with the extensive cooperation of Lex Mundi and Lex Africa
member firms. The data used in this project are available at http://iicg.som.
yale.edu/.

©2003 by the President and Fellows of Harvard College and the Massachusetts Institute of
Technology.
The Quarterly Journal of Economics, May 2003

453
454 QUARTERLY JOURNAL OF ECONOMICS

might adversely influence others, and courts resolve property and

contractual disputes.
Economic theory does not tell us which of these mechanisms
of securing property and enforcing contracts is the best, and in
reality they are all far from perfect. Private security and enforce-
ment, while working well in some environments, often degenerate
into violence. Indeed, Smith [1776] saw “a tolerable administra-
tion of justice” as one of the few proper functions of government,

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enabling an ordinary citizen to seek justice against richer and
more powerful offenders who control private enforcement.1 Public
regulation, likewise, while sometimes effective,2 is often cor-
rupted and “captured” by the very violators, such as monopolists
and pollutants, it needs to restrain [Stigler 1971]. Economists
have been generally most optimistic about courts as the institu-
tion securing property and enforcing contracts [Coase 1960], and
with few exceptions (e.g., Johnson, McMillan, and Woodruff
[2002], and Bianco, Japelli, and Pagano [2001]) have devoted
little attention to analyzing their limitations. From the point of
view of evaluating alternative institutional arrangements, how-
ever, it is crucial to understand the factors that make courts
function more or less effectively.
In this paper we present an empirical study of the effective-
ness of courts as mechanisms of resolving simple disputes in 109
countries. We examine how a plaintiff can use an official court to
evict a nonpaying tenant and to collect a bounced check. We find
that even these simple disputes are resolved extremely slowly by
courts in most countries, taking an average of over 200 days. We
also find huge variation among countries in the speed and quality
of courts.
We try to explain this variation from the perspective of three
broad theories. The “development” theory holds that courts, like
many other institutions, work better in countries that have richer
and more educated populations [Demsetz 1967; North 1981].
According to this theory, there are fixed costs of setting up insti-
tutions, which only become socially worth paying once the de-
mand for them—largely driven by the level of economic develop-

1. Likewise, commentators on transition from socialism see the reform of the

public legal system as an antidote to the violence associated with private enforce-
ment (e.g., Hay and Shleifer [1998] and Hay, Shleifer, and Vishny 1996]).
2. Glaeser, Johnson, and Shleifer [2001] and Glaeser and Shleifer [2001,
2003] describe some circumstances in which regulation is an efficient strategy for
securing property rights.
 COURTS 455

ment— becomes high enough. A poor society may rely on informal

dispute resolution; a richer one relies on more complex contracts
and needs courts to resolve disputes. Similarly, a better educated
population both raises the efficiency of courts (if human capital is
an input) and the demand for them.
The “incentive” theory holds that the efficiency of courts is
shaped by the incentives of the participants in dispute resolution,
including the judges, the lawyers, and the litigants [Messick

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1999; Buscaglia and Dakolias 1999]. According to this theory,
courts work poorly when the participants have weak or wrong
incentives: judges do not care about delays; lawyers are paid to
prolong proceedings; defendants seek to avoid judgment. The
implication is that factors such as mandatory deadlines for
judges, contingency fees for attorneys, and “loser pays” rules
improve court performance.
The third theory—which is more novel and central to this
paper—is that performance of courts is determined by how the
law regulates their operation, what we call procedural formalism
or formalism for short. The main contribution of this paper is to
explain theoretically and to measure empirically the determi-
nants of procedural formalism, as well as to assess its conse-
quences for the quality of dispute resolution in courts.
In a theoretical model of an ideal court, a dispute between
two neighbors can be resolved by a third on fairness grounds,
with little knowledge or use of law, no lawyers, no written sub-
missions, no procedural constraints on how evidence, witnesses,
and arguments are presented, and no appeal [Shapiro 1981]. Yet
in reality, all legal systems heavily regulate dispute resolution:
they rely on lawyers and professional judges, regiment the steps
that the disputants must follow, regulate the collection and pre-
sentation of the evidence, insist on legal justification of claims
and judges’ decisions, give predominance to written submissions,
and so on. We examine the reasons for procedural formalism as
well as its consequences for the performance of courts.
To this end, in cooperation with Lex Mundi, the largest
international association of law firms, we describe the exact pro-
cedures used to resolve two specific disputes in 109 countries.
These are the eviction of a residential tenant for nonpayment of
rent and the collection of a check returned for nonpayment. We
describe the cases to a law firm in each country in great detail,
and ask for a complete write-up of the legal procedures necessary
to dispute these cases in court and the exact articles of the law
456 QUARTERLY JOURNAL OF ECONOMICS

governing these procedures. We use the responses to construct

measures of formalism, defined as the extent to which regulation
causes dispute resolution to deviate from the neighbor model.
Research in comparative law and legal history suggests that
formalism varies systematically among legal origins [Berman
1983; Merryman 1985; Damaska 1986; Schlesinger et al. 1988].
In particular, civil law countries generally regulate dispute reso-
lution, including the conduct of the adjudicators, more heavily

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than do common law countries. Our data provide a striking em-
pirical confirmation of this proposition. Legal origins alone ex-
plain around 40 percent of the variation in our measures of
formalism among 109 countries. We also find that adjudication is
more formalized in the less developed than in the rich countries.
We next turn to the three hypotheses on the determinants of
judicial quality. From the participating law firms, we obtain
estimates of the expected duration of our two disputes in calendar
days, from the original filing of a complaint to the ultimate
enforcement of judgment. In addition, we use assessments of
judicial quality from other data sources, covering such areas as
enforceability of contracts, access to justice, and corruption, as
well as data from the World Business Environment Survey of
small firms on the fairness, consistency, honesty, and other as-
pects of the legal system. We also collect data on per capita
income and educational level in each country, as well as several
measures of incentives facing judges, attorneys, and litigants.
We find that ceteris paribus higher procedural formalism is a
strong predictor of longer duration of dispute resolution. Higher
formalism also predicts lower enforceability of contracts, higher
corruption, as well as lower honesty, consistency, and fairness of
the system. These results hold both in ordinary least squares
regressions, and in instrumental variable estimates where legal
origin is used as an instrument for formalism. The results hold for
both eviction and check collection. In our data there is no evidence
that formalism secures justice.
We also find some evidence consistent with the development
hypothesis, namely that countries with richer populations have
higher quality courts. On the other hand, we find almost no
evidence that the incentives of the participants in the legal sys-
tem influence its quality.
Our findings advance the previous research in three distinct
ways. First, the paper takes the research on the quantitative
measurement of institutions in a new direction: the study of
 COURTS 457

courts. Finding objective measures of institutional structure is

sometimes more useful than just focusing on survey assessments
of quality, as is often done, because it may point to the specific
directions of efficiency-improving reform. Second, with respect to
the study of courts, the paper is novel in attributing both their
efficiency and their ability to deliver justice to the characteristics
of the legal procedure, rather than to general underdevelopment
of the country or to poor incentives. Third, the paper links both

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the lack of efficiency of courts and their inability to deliver justice
to the transplantation of legal systems. As such, it supports the
hypothesis that transplantation is in part responsible for the
structure and quality of the existing institutions.

II. THEORIES OF PROCEDURAL FORMALISM

According to Shapiro [1981], the essence of an idealized uni-
versal court is the resolution of a dispute among two neighbors by
a third, guided by common sense and custom. Such resolution
does not rely on formal law and does not circumscribe the proce-
dures that the neighbors employ to address their differences. Yet
courts everywhere deviate from this ideal. They employ profes-
sional judges and lawyers to resolve disputes. They heavily regi-
ment procedures, restricting how claims and counterclaims are
presented, how evidence is interpreted, and how various parties
communicate with each other. Rather than holding an informal
meeting, many courts assemble written records of the proceed-
ings, and allow disputants to appeal the decisions of a judge. Most
jurisdictions, in short, heavily regulate their civil procedures.
The reasons for regulating dispute resolution are similar to
those for regulation in general: the sovereign may wish to control
the outcome. He may wish to punish some conduct to a greater
extent than a judge-neighbor would, to establish precedents, or to
reduce errors relative to informal adjudication. He may also wish
that disputes be resolved in a consistent way across his domains,
so as to promote trade or political uniformity. Finally, he may
wish disputes to be resolved so as to favor himself and his political
supporters, or to punish his enemies and opponents. To achieve
these goals, sovereigns regulate the judicial procedure so that
“judges are no more than the mouth that pronounces the words of
the law, mere passive beings, incapable of moderating either its
force or rigour” [Montesquieu 1748, 1984, p. 194].
A further reason to regulate dispute resolution is that infor-
458 QUARTERLY JOURNAL OF ECONOMICS

mal triad justice is vulnerable to subversion by the powerful. If

one of the two disputants is economically or politically more
powerful than the other, he can encourage the supposedly impar-
tial judge to favor him, using either bribes or threats. The other
side of this coin is access to justice: the less advantaged members
of a society must expect justice rather than abuse from the state
or powerful opponents. As the great German jurist Rudolf von
Jhering exclaimed, “form is the sworn enemy of arbitrary rule,

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the twin sister of liberty” [1898, p. 471].
For these, and possibly other reasons, most jurisdictions in
the world heavily formalize legal procedures. Moreover, as legal
historians clearly recognize, patterns of such regulation are inti-
mately related to the civil versus common law origin of the coun-
try’s laws. These legal families originate in Roman and English
law, respectively, and were transplanted to many countries
through conquest and colonization (by France, Germany, and
Spain in the case of civil law, and England in the case of common
law). Although legal systems of most countries have evolved since
colonial times, key features of legal origin are often preserved
through the centuries [La Porta et al. 1998, 1999].
There are different theories of how legal origin has shaped
legal procedure in general, and formalism in particular. Hayek
[1960] and Merryman [1985] attribute the differences to the ideas
of the Enlightenment and the French Revolution. In France the
revolutionaries and Napoleon did not trust the judges, and codi-
fied judicial procedures in order to control judicial discretion.
According to Schlesinger et al. [1988], in civil law countries “the
procedural codes are meant to be essentially all-inclusive state-
ments of judicial powers, remedies, and procedural devices.” Con-
sistent with von Jhering’s logic, procedural formalism was seen
as a guarantee of freedom. In England and the United States, in
contrast, lawyers and judges were on the “right” side of the
revolutions, and hence the political process accommodated a
great deal more judicial independence. In the common law tradi-
tion, “a code is supplemental to the unwritten law, and in con-
struing its provisions and filling its gaps, resort must be had to
the common law” [Schlesinger et al. 1988]. As a consequence, less
formalism is required in the judicial procedure.
Dawson [1960], Berman [1983], Damaska [1986], and Glae-
ser and Shleifer [2002] argue that the procedural differences
between common and civil law actually go back to the twelfth and
thirteenth centuries. Glaeser and Shleifer [2002] attribute
 COURTS 459

greater formalism to the need to protect law enforcers from coer-

cion by disputing parties through violence and bribes. This risk of
coercion was greater in the less peaceful France than in the more
peaceful England, where neighborly dispute resolution by juries
(coming closer to Shapiro’s ideal) was more feasible. The different
approaches to legal procedure—motivated by the different law
and order environments of England and France—were then
transplanted through conquest and colonization to most of the

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rest of the world [Watson 1974; La Porta et al. 1998; Berkowitz,
Pistor, and Richard 2003].
The fact that most countries inherited significant parts of
their legal procedures— often involuntarily—is important for our
analysis. At the econometric level, it suggests that legal origin
can be used as an instrument for the degree of formalism of the
legal procedure. At the substantive level, the nature of transplan-
tation enables us to distinguish two hypotheses. If countries
select their legal procedures voluntarily, then one can argue that
greater formalism is an efficient adaptation to a weaker law and
order environment. However, if legal procedures are transplanted
through conquest or colonization, the efficient adaptation model
does not apply. Rather, we can attribute the consequences of legal
formalism to the exogenously determined features of the legal
procedure, and in this way consider the efficiency of alternative
rules.

III. DATA

III.A. Collection Procedures

Our data are derived from questionnaires answered by attor-
neys at Lex Mundi and Lex Africa member firms. Lex Mundi and
Lex Africa are international associations of law firms, which
include as their members law firms with offices in 115 countries.
Of these 115 countries, Lex Mundi members in six did not accept
our invitation to join the project, and these six jurisdictions
(Burkina Faso, Cambodia, Nicaragua, Northern Ireland, Scot-
land, and St. Kitts and Nevis) were removed from the sample. We
have received and codified data from all the others.
The 109 cooperating law firms received a questionnaire de-
signed by the authors with the advice of practicing attorneys from
Argentina, Belgium, Botswana, Colombia, Mexico, and the
United States. The questionnaire covered the step-by-step evolu-
460 QUARTERLY JOURNAL OF ECONOMICS

tion of an eviction and a check collection procedure before local

courts in the country’s largest city. The focus on these two specific
disputes has a number of advantages. First, they represent
typical situations of default on an everyday contract in virtually
every country. The adjudication of such cases illustrates the
enforcement of property rights and private contracts in a given
legal environment. Second, the case facts and procedural assump-
tions could be tailored to make the cases comparable across

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countries. Third, the resolution of these cases involves lower level
civil trial courts in all countries (unless Alternative Dispute Reso-
lution is used). Because these are the courts whose functioning is
most relevant to many of a country’s citizens, the focus on the
quality of such courts is appropriate in a development context.
For more complex disputes, additional issues arise, and it may
not be appropriate to generalize our findings. For example, com-
mercial arbitration is available in many countries to large com-
panies, though not to ordinary citizens. Perhaps even more im-
portantly, formalism may be essential for justice in complex
disputes even when informality is adequate for the simple cases
we consider.3
In presenting the cases, we provided the respondent firm
with significant detail, including the amount of the claim, the
location and main characteristics of the litigants, the presence of
city regulations, the nature of the remedy requested by the plain-
tiff, the merit of the plaintiff’s and the defendant’s claims, and the
social implications of the judicial outcomes. Furthermore, to un-
derstand how courts work, we specified that there is no settle-
ment. These standardized details enabled the respondent law
firms to describe the procedures explicitly and in full detail, and
allowed us to get around the problem that different procedures
arise in different circumstances.4
The questionnaires provided to law firms were divided into
two parts: (1) description of the procedure of the hypothetical case
step by step, and (2) multiple-choice questions. The following
aspects of the procedure were covered: (1) step-by-step descrip-

3. The collection of a bounced check also gets us away from the concern that
rules governing the eviction of a nonpaying tenant are shaped by a nation’s
“socialist” sentiment. The fact that the structures of dispute resolution for eviction
and check collection are so similar is inconsistent with the view that socialism
drives the results.
4. We have discovered that attorneys in even the largest law firms in most
countries are familiar with eviction and check collection procedures, generally
because they have worked on such cases for their clients.
 COURTS 461

tion of the procedure, (2) estimates of the actual duration at each

stage, (3) indication of whether written submissions were re-
quired at each stage, (4) indication of specific laws applicable at
each stage, (5) indication of mandatory time limits at each stage,
(6) indication of the form of the appeal, and (7) the existence of
alternative administrative procedures. Multiple-choice questions
were used both to collect additional information and to check the
answers at the initial stage. In addition, we asked questions

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about the incentives of judges, attorneys, and the litigants.
At each firm, the answers were prepared by a member of the
Litigation Department, and reviewed by a member of the General
Corporate and Commercial Department. Two lawyers in each law
firm, from different departments, were required to read, approve,
and sign the questionnaire. As an additional check, the law firms
were required to indicate when a particular law governed the
relevant stage of the procedure, and to provide a copy of that law.
The answers provided by member law firms were coded using the
descriptions of the procedures and answers to multiple-choice
questions. In most cases, coding was followed by an additional
round of questions to the completing attorneys aimed to clarify
the inconsistencies in their answers.

III.B. Measuring Formalism

Comparative law textbooks and manuals of civil procedure
point to several areas where the laws of different countries regu-
late dispute resolution differently. In our choice of the areas of
such regulation, we were guided by the 1994 International Ency-
clopaedia of Laws—Civil Procedure published by Kluwer Law
International. The Encyclopaedia covers seventeen countries
from different legal origins, and discusses such broad areas of
civil procedure as judicial organization, jurisdiction, actions and
claims, nature of proceedings, legal costs, evidence, enforcement
of judgments, and arbitration. Some of the areas covered in the
Encyclopaedia were not relevant to the simple disputes we con-
sidered. Others, such as Alternative Dispute Resolution, are cov-
ered briefly in our survey, although we focus on courts. Appendix
1 presents the relationship between the topics covered in the
Encyclopaedia’s volume on Civil Procedure for France and the
indices used in this paper.
We focus on seven areas of formalism, and codify the answers
provided by Lex Mundi firms from the perspective of the neighbor
model. Below, we briefly describe our approach to organizing
462 QUARTERLY JOURNAL OF ECONOMICS

these data. The exact definitions of the variables are contained in

Table I.
The first area covers the required degree of professionalism
of the main actors in the judicial process, namely judges and
lawyers. This covers three specific areas. First, a basic jurisdic-
tional distinction is between general and specialized courts. For
the simple cases we consider, access to specialized courts gener-
ally entails procedural simplification aimed at “mass production”

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(similar to traffic courts in the United States). We therefore take
the resolution of disputes in specialized courts to be closer to the
neighbor model than that in a general jurisdiction court.
Second, we distinguish between judges who have undergone
complete professional training, and arbitrators, administrative
officers, practicing attorneys, merchants, or any other laypersons
who may be authorized to hear or decide the case. In some
countries (e.g., New Zealand, United Arab Emirates) all disputes
between landlords and tenants are resolved by housing tribunals
composed of neighbors or by representatives of associations of
landlords and tenants. Such nonprofessional judges are closer to
the neighbor model.
Third, in some countries it is mandatory to have an attorney
to appear before the judge, while in others it is entirely voluntary
or even prohibited. Evidently, the absence of legal representation
is closer to the neighbor model. Indeed, in the absence of such
representation, the judge frequently assumes the position of a
mediator guiding the parties to an agreement.
Using the data provided by law firms, we combine these three
pieces of information to construct the “professional versus lay-
men” index for each of the two disputes for each country.
The second area we consider is the preeminence of written
versus oral presentation at each stage of the procedure, including
filing, service of process, defendant’s opposition, evidence, final
arguments, judgment, notification of judgment, and enforcement
of judgment. We take oral presentation to be closer to the neigh-
bor model, and aggregate this information for each country and
each case into the index of “written versus oral” elements.
The third area is the need for legal justification (meaning
reference to the legal reasons and articles of the law) in the
complaint and in the judgment, as well as the necessity of basing
the judgment in the law as opposed to equity. In many countries
a judgment must be justified by statutory law or settled prece-
dents. In other countries judgment must still be justified, but in
 COURTS 463

TABLE I
DESCRIPTION OF THE VARIABLES
This table describes the variables in the paper. Unless otherwise specified, the
source for the variables is the survey of law firms and the laws of each country. All
the data for each country can be found at http://iicg.som.yale.edu/.

Variable Description

Professionals versus laymen

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General jurisdiction court The variable measures whether a court of
general or of limited jurisdiction would be
chosen or assigned to hear the case under
normal circumstances. We define a court of
general jurisdiction as a state institution,
recognized by the law as part of the regular
court system, generally competent to hear and
decide regular civil or criminal cases. A limited
jurisdiction court would hear and decide only
some types of civil cases. Specialized debt-
collection or housing courts, small-claims
courts, and arbitrators or justices of the peace
are examples. Equals one for a court of general
jurisdiction, and zero for a court of limited
jurisdiction.
Professional versus The variable measures whether the judge, or the
nonprofessional judge members of the court or tribunal, could be
considered as professional. A professional judge
is one who has undergone a complete
professional training as required by law, and
whose primary activity is to act as judge or
member of a court. A nonprofessional judge is
an arbitrator, administrative officer, practicing
attorney, merchant, or any other layperson
who may be authorized to hear and decide the
case. Equals one for a professional judge, and
zero for a nonprofessional judge.
Legal representation is The variable measures whether the law requires
mandatory the intervention of a licensed attorney. The
variable equals one when legal representation
is mandatory, and zero when legal
representation is not mandatory.
Index: professionals versus The index measures whether the resolution of
laymen the case relies on the work of professional
judges and attorneys, as opposed to other types
of adjudicators and lay people. The index is the
normalized sum of (i) general jurisdiction court,
(ii) professional versus nonprofessional judge,
and (iii) legal representation is mandatory. The
index ranges from zero to one, where higher
values mean more participation by
professionals.
464 QUARTERLY JOURNAL OF ECONOMICS

TABLE I
(CONTINUED)

Variable Description

Written Versus Oral

Filing Equals one if the complaint is normally

submitted in written form to the court, and
zero if it can be presented orally.

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Service of process Equals one if the defendant’s first official notice
of the complaint is most likely received in
writing, and zero otherwise.
Opposition Equals one if under normal circumstances the
defendant’s answer to the complaint should be
submitted in writing, and zero if it may be
presented orally to court.
Evidence Equals one if evidence is mostly submitted to the
court in written form, in the form of
attachments, affidavits, or otherwise, and zero
if most of the evidence, including documentary
evidence, is presented at oral hearings before
the judge.
Final arguments Equals one if final arguments on the case are
normally submitted in writing, and zero if they
are normally presented orally in court before
the judge.
Judgment Equals one if the judge issues the final decision
in the case in written form, and zero if he
issues it orally in an open court hearing
attended by the parties. The defining factor is
whether the judge normally decides the case at
a hearing. If the judge simply reads out a
previously made written decision, the variable
equals one. Conversely, for an orally
pronounced judgment that is later transposed
into writing for enforcement purposes, the
variable equals zero.
Notification of judgment Equals one if normally the parties receive their
first notice of the final decision in written form,
by notice mailed to them, publication in a court
board or gazette, or through any other written
means. The variable equals zero if they receive
their first notice in an open court hearing
attended by them.
Enforcement of judgment Equals one if the enforcement procedure is
mostly carried out through the written court
orders or written acts by the enforcement
authority, and zero otherwise.
 COURTS 465

TABLE I
(CONTINUED)

Index: Written versus oral The index measures the written or oral nature of
elements the actions involved in the procedure, from the
filing of the complaint until the actual
enforcement. The index is calculated as the
number of stages carried out mostly in written
form over the total number of applicable
stages, and it ranges from zero to one, where

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higher values mean higher prevalence of
written elements.

Legal justification

Complaint must be legally The variable measures whether the complaint is

justified required, by law or court regulation, to include
references to the applicable laws, legal
reasoning, or formalities that would normally
require legal training. Equals one for a legally
justified complaint, and zero when the
complaint does not require legal justification
(specific articles of the law or case-law).
Judgment must be legally The variable measures whether the judgment
justified must expressly state the legal justification
(articles of the law or case-law) for the
decision. Equals one for a legally justified
judgment, and zero otherwise.
Judgment must be on law The variable measures whether the judgment
(not on equity) may be motivated on general equity grounds,
or if it must be founded on the law. Equals one
when judgment must be on law only, and zero
when judgment may be based on equity
grounds.
Index: legal justification The index measures the level of legal justification
required in the process. The index is formed by
the normalized sum of (i) complaint must be
legally justified, (ii) judgment must be legally
justified, and (iii) judgment must be on law
(not on equity). The index ranges from zero to
one, where higher values mean a higher use of
legal language or justification.

Statutory regulation of evidence

Judge cannot introduce Equals one if, by law, the judge cannot freely
evidence request or take evidence that has not been
requested, offered, or introduced by the parties,
and zero otherwise.
466 QUARTERLY JOURNAL OF ECONOMICS

TABLE I
(CONTINUED)

Variable Description

Judge cannot reject Equals one if, by law, the judge cannot refuse to
irrelevant evidence collect or admit evidence requested by the
parties, even if she deems it irrelevant to the
case, and zero otherwise.
Out-of-court statements Equals one if statements of fact that were not

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are inadmissible directly known or perceived by the witness, but
only heard from a third person, may not be
admitted as evidence. The variable equals zero
otherwise.
Mandatory prequalification Equals one if, by law, the judge must prequalify
of questions the questions before they are asked of the
witnesses, and zero otherwise.
Oral interrogation only by Equals one if parties and witnesses can only be
judge orally interrogated by the judge, and zero if
they can be orally interrogated by the judge
and the opposing party.
Only original documents Equals one if only original documents and
and certified copies are “authentic” or “certified” copies are admissible
admissible documentary evidence, and zero if simple or
uncertified copies are admissible evidence as
well.
Authenticity and weight of Equals one if the authenticity and probative
evidence defined by law value of documentary evidence is specifically
defined by the law, and zero if all admissible
documentary evidence is freely weighted by the
judge.
Mandatory recording of Equals one if, by law, there must be a written or
evidence magnetic record of all evidence introduced at
trial, and zero otherwise.
Index: statutory regulation The index measures the level of statutory control
of evidence or intervention of the administration,
admissibility, evaluation, and recording of
evidence. The index is formed by the
normalized sum of the following variables: (i)
judge cannot introduce evidence, (ii) judge
cannot reject irrelevant evidence, (iii) out-of-
court statements are inadmissible, (iv)
mandatory prequalification of questions, (v)
oral interrogation only by judge, (vi) only
original documents and certified copies are
admissible, (vii) authenticity and weight of
evidence defined by law, and (viii) mandatory
recording of evidence. The index ranges from
zero to one, where higher values mean a higher
statutory control or intervention.
 COURTS 467

TABLE I
(CONTINUED)

Control of superior review

Enforcement of judgment Equals one if the enforcement of judgment is

is automatically automatically suspended until resolution of the
suspended until appeal when a request for appeal is granted.
resolution of the appeal Equals zero if the suspension of the
enforcement of judgment is not automatic, or if

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the judgment cannot be appealed at all.
Comprehensive review in Equals one if issues of both law and fact
appeal (evidence) can be reviewed by the appellate
court. Equals zero if only new evidence or
issues of law can be reviewed in appeal, or if
judgment cannot be appealed.
Interlocutory appeals are Equals one if interlocutory appeals are allowed,
allowed and zero if they are always prohibited.
Interlocutory appeals are defined as appeals
against interlocutory or interim judicial
decisions made during the course of a judicial
proceeding in first instance and before the final
ruling on the entire case.
Index: control of superior The index measures the level of control or
review intervention of the appellate court’s review of
the first-instance judgment. The index is
formed by the normalized sum of the following
variables: (i) enforcement of judgment is
automatically suspended until resolution of
appeal, (ii) comprehensive review in appeal,
and (iii) interlocutory appeals are allowed. The
index ranges from zero to one, where higher
values mean higher control or intervention.

Engagement formalities

Mandatory pretrial Equals one if the law requires plaintiff to

conciliation attempt a pretrial conciliation or mediation
before filing the lawsuit, and zero otherwise.
Service of process by Equals one if the law requires the complaint to
judicial officer required be served to the defendant through the
intervention of a judicial officer, and zero if
service of process may be accomplished by
other means.
468 QUARTERLY JOURNAL OF ECONOMICS

TABLE I
(CONTINUED)

Variable Description

Notification of judgment by Equals one if the law requires the judgment to be

judicial officer required notified to the defendant through the
intervention of a judicial officer, and zero if
notification of judgment may be accomplished
by other means.

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Index: engagement The index measures the formalities required to
formalities engage someone in the procedure or to hold
him/her accountable of the judgment. The
index is formed by the normalized sum of the
following variables: (i) mandatory pretrial
conciliation, (ii) service of process by judicial
officer required, and (iii) notification of
judgment by judicial officer required. The index
ranges from zero to one, where higher values
mean a higher statutory control or intervention
in the judicial process.

Independent procedural actions

Filing and service The total minimum number of independent

procedural actions required to complete filing,
admission, attachment, and service.
Trial and judgment The total minimum number of independent
procedural actions required to complete
opposition to the complaint, hearing or trial,
evidence, final arguments, and judgment.
Enforcement The total minimum number of independent
procedural actions required to complete
notification and enforcement of judgment.
 COURTS 469

TABLE I
(CONTINUED)

Index: independent An independent procedural action is defined as a

procedural actions step of the procedure, mandated by law or
court regulation, that demands interaction
between the parties or between them and the
judge or court officer (e.g., filing a motion,
attending a hearing, mailing a letter, or seizing
some goods). We also count as an independent

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procedural action every judicial or
administrative writ or resolution (e.g., issuing
judgment or entering a writ of execution)
which is legally required to advance the
proceedings until the enforcement of judgment.
Actions are always assumed to be simultaneous
if possible, so procedural events that may be
fulfilled in the same day and place are only
counted as one action. To form the index, we
(1) add the minimum number of independent
procedural actions required to complete all the
stages of the process (from filing of lawsuit to
enforcement of judgment); and (2) normalize
this number to fall between zero and one using
the minimum and the maximum number of
independent procedural actions among the
countries in the sample. The index takes a
value of zero for the country with the minimum
number of independent procedural actions, and
a value of one for the country with the
maximum number of independent procedural
actions.

Formalism index

Formalism index The index measures substantive and procedural

statutory intervention in judicial cases at
lower-level civil trial courts, and is formed by
adding up the following indices: (i)
professionals versus laymen, (ii) written versus
oral elements, (iii) legal justification, (iv)
statutory regulation of evidence, (v) control of
superior review, (vi) engagement formalities,
and (vii) independent procedural actions. The
index ranges from zero to seven where seven
means a higher level of control or intervention
in the judicial process.
470 QUARTERLY JOURNAL OF ECONOMICS

TABLE I
(CONTINUED)

Variable Description

Incentives of parties

Mandatory time limit for Equals one if the judge is required by law to
admission admit or reject the lawsuit within a certain
period of time, and zero otherwise.

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Mandatory time limit to Equals one if the period in which the parties may
present evidence collect or present evidence is fixed by law to a
certain number of days after service or number
of days before hearing, and zero otherwise.
Mandatory time limit to Equals one if the defendant is required by law to
present defense file the opposition within certain time limit,
either in terms of number of days from service
or number of days before the hearing. The
variable equals zero otherwise.
Mandatory time limit to Equals one if the defendant is required by law to
present defense file the opposition within certain time limit,
either in terms of number of days from service
or number of days before the hearing. The
variable equals zero otherwise.
Mandatory time limit for Equals one if the judge is required by law to
judgment enter judgment within a specified period of
time after the conclusion of the hearing or the
final pleadings, and zero otherwise.
Mandatory time limit for Equals one if the court is required by law to
notification of judgment notify the parties within a specified period of
time after judgment is entered, and zero
otherwise.
Index: mandatory time The presence of mandatory time limits in the
limits procedure. The index is calculated as the
average of (i) term for admission, (ii) term to
present evidence, (iii) term to present defense,
(iv) term for judgment, (v) term for compliance,
(vi) term for notification of judgment. The
index ranges from zero to one, where higher
values mean more mandatory deadlines.
Quota litis prohibited The variable equals one if quota litis or
contingent fee agreements are prohibited by
law in all cases, and zero otherwise.
Loser pays rule The variable equals one if the loser is required to
pay all the costs of the dispute, and zero
otherwise.
 COURTS 471

TABLE I
(CONTINUED)

Duration in practice

Duration until completion Estimated duration, in calendar days, between

of service of process the moment the plaintiff files the complaint
until the moment of service of process to the
defendant.
Duration of trial Estimated duration, in calendar days, between

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the moment of service of process and the
moment the judgment is issued.
Duration of enforcement Estimated duration, in calendar days, between
the moment of issuance of judgment and the
moment the landlord repossesses the property
(for the eviction case) or the creditor obtains
payment (for the check collection case).
Total duration The total estimated duration in calendar days of
the procedure under the factual and procedural
assumptions provided. It equals the sum of (i)
duration until completion of service of process,
(ii) duration of trial, and (iii) duration of
enforcement.

Other judicial quality measures

Enforceability of contracts “The relative degree to which contractual

agreements are honored and complications
presented by language and mentality
differences.” Scale for 0 to 10, with higher
scores indicating higher enforceability. Source:
Business Environmental Risk Intelligence.
Exact definition in Knack and Keefer [1995].
Legal system is fair and “In resolving business disputes, do you believe
impartial your country’s court system to be fair and
impartial?” The scale ranges from 1 to 6, where
higher scores mean a fairer and more impartial
legal system. Source: World Business
Environment Survey [2000, 2002].
Legal system is honest or “In resolving business disputes, do you believe
uncorrupt your country’s court system to be
honest/uncorrupt?” The scale ranges from 1 to
6, where a higher score signals a more honest
and uncorrupt system. Source: World Business
Environment Survey.
472 QUARTERLY JOURNAL OF ECONOMICS

TABLE I
(CONTINUED)

Variable Description

Legal system is affordable “In resolving business disputes, do you believe

your country’s court system to be affordable?”
The scale ranges from 1 to 6, where a higher
score means a more affordable legal system.
Source: World Business Environment Survey.

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Legal system is consistent “In resolving business disputes, do you believe
your country’s court system to be consistent?”
The scale ranges from 1 to 6, where a higher
score means a more consistent legal system.
Source: World Business Environment Survey.
Confidence in legal system The questionnaire asks the managers the degree
to which they believe the system will uphold
contracts and property rights in a business
dispute. The scale ranges from 1 to 6, where a
higher score means a higher degree of
confidence on the system. Source: World
Business Environment Survey.
Corruption A composite index for the year 2000 that draws
on fourteen data sources from seven
institutions: the World Economic Forum, the
World Business Environment Survey of the
World Bank, the Institute of Management
Development (in Lausanne),
PricewaterhouseCoopers, the Political and
Economic Risk Consultancy (in Hong Kong),
the Economist Intelligence Unit and Freedom
House’s Nations in Transit. The score ranges
between 10 (highly clean) and 0 (highly
corrupt). Source: Transparency International
(www.transparency.org).
Law and order Integrity of legal system in 2000. This component
is based on the Political Risk Component 1
(Law and Order) from the PRS Group’s
International Country Risk Guide (various
issues). Rankings are modified to a ten-point
scale. Source: Economic Freedom of the World
[Gwartney, Lawson, and Block 2001].
 COURTS 473

TABLE I
(CONTINUED)

Variable Description

Other variables

Log of GNP per capita Logarithm of GNP per capita in 1999, Atlas
method, expressed in current US dollars. When
1999 income data in US dollars were not

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available, the latest available number was used
(1996 for Kuwait, 1997 for Cayman Islands,
Gibraltar, Turks and Caicos Island, 1998 for
Anguilla, Bahrain, Netherlands Antilles,
United Arab Emirates). Income for Anguilla,
the British Virgin Islands, the Cayman
Islands, Gibraltar, Monaco, the Netherlands
Antilles, and the Turks and Caicos Islands is
GDP per capita (PPP) from the CIA World
Factbook. Source: World Development
Indicators [2001].
Legal origin Identifies the legal origin of the company law or
commercial code of each country (English,
French, Socialist, German, Scandinavian).
Source: La Porta et al. [1999].
Latitude The absolute value of the latitude of the capital
of the country, scaled to take values between
zero and one. Source: CIA Factbook.
Average years of schooling Average number of years of schooling received
per person aged 25 and over in 1992 (last
available). Source: Human Development Report
[1994].
Ethnic fractionalization Ethnic fractionalization is computed as one
minus the Herfindahl index of ethnic group
shares. This calculation considers the
probability that two persons, randomly chosen,
from a population belong to different groups.
Source: Alesina et al. [2003].

equity rather than in law. In still other countries, judicial deci-

sions require no justification whatsoever. Since the neighbor
model presumably does not call for such legal justifications, we
aggregate this information into an index of “legal justification.”
The fourth area is statutory regulation of evidence. The rules
of evidence are sometimes considered to be a key factor in differ-
entiating the overall efficiency of legal procedures among coun-
tries [Langbein 1985]. First, in some countries the judge cannot
474 QUARTERLY JOURNAL OF ECONOMICS

request evidence not requested by the parties, a restriction on the

neighbor model. Second, the judge in some countries cannot
refuse to collect or admit evidence requested by the parties, even
if the judge feels this evidence is irrelevant to the case. This, too,
presents a restriction on the discretion of the judge in the neigh-
bor model. Third, hearsay evidence is not admissible in some
countries while, in others, the judge can weigh it. Presumably,
the inadmissibility of out-of-court statements is a restriction on

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judicial freedom in the neighbor model. Fourth, in some jurisdic-
tions the judge must prequalify a question before it is posed to the
witness while, in others, parties may ask witnesses questions
without such prequalification. We take the latter scenario as
more compatible with the neighbor model. Fifth, in some juris-
dictions, only original documents and certified copies are admis-
sible, a restriction not present in other jurisdictions. Presumably,
the neighbor model would not have these restrictions. Sixth, in
some countries authenticity and the weight of evidence are de-
fined by law; in others they are not. In the neighbor model, we
would not expect the evidence to be subjected to rigid rules on
admissibility and weight. Seventh, in some countries, but not
others, there is mandatory recording of evidence, designed to
facilitate the superior authority’s control over the judge. We do
not take such recording to be consistent with the neighbor model.
As before, we aggregate these seven dimensions into the index of
“statutory regulation of evidence.”
The fifth area of regulation of formalism is the control of the
superior review of the first instance judgment. The scope of ap-
pellate review determines the level of sovereign control over the
trial court proceedings [Damaska 1986]. In general, we take the
control of a judge by a superior court as inconsistent with the
neighbor model, and consider a variety of mechanisms of superior
review. First, in some countries the enforcement of judgment is
automatically suspended until the resolution of the appeal, which
substantially reduces the importance of the first instance judg-
ment. In others, the suspension of enforcement is either nonau-
tomatic, or even not allowed. We take the automatic suspension
as being inconsistent with the neighbor model. Second, in some
countries the review and appeal of judicial decisions are compre-
hensive. In others, more compatibly with the neighbor model,
only new evidence or issues of law can be reviewed on appeal, or
the judgment cannot be appealed at all. Third, some countries,
but not others, allow interlocutory appeals (those of interim ju-
 COURTS 475

dicial decisions), which we take to be incompatible with the neigh-

bor model. We aggregate these three aspects of review into an
“index of control of superior review.”
The sixth area is engagement formalities that must be ob-
served before a party is legally bound by the court proceedings. In
some countries a lawsuit cannot be initiated unless a formal
pretrial conciliation is attempted between the parties. The noti-
fication procedures also vary markedly among countries. In some

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places, the complaint can be notified to the defendant by the
plaintiff himself or by his attorney, or simply by mailing a letter.
In others, the defendant cannot be held accountable unless he is
served the claim by an appointed court officer. Finally, in some
countries the judgment is deemed notified to the parties when
pronounced in open court; in others it must be personally notified
to the parties by a duly appointed court employee. We submit that
entirely voluntary pretrial conciliation and flexible rules of noti-
fication of process and judgment are more compatible with the
neighbor model. These three dimensions are aggregated into the
index of “engagement formalities.”
The seventh area is the count of independent procedural
actions involved in pursuing a claim through a court, covering the
filing and service of a complaint, trial and judgment, and enforce-
ment. An independent procedural action is defined as every step
in the procedure, mandated by the law or by court regulation,
which demands interaction between the parties or between them
and the judge or court officer, such as filing a motion or attending
a hearing. We also count as an independent procedural action
every judicial or administrative writ or resolution, such as issuing
judgment or entering a writ of execution, which is legally re-
quired to advance the proceedings until the enforcement of judg-
ment. Actions are always assumed to be simultaneous if possible,
so procedural events that may be fulfilled in the same day and
place are only counted as one action.5 In the idealized neighbor
model, there would be only three procedural actions: (1) a claim-
ant would request the judge’s intervention, (2) the judge and the
claimant would together meet the defendant and the judge would

5. We only count the minimum number of independent procedural actions

required to bring the case to completion. Thus, the appointment of a lawyer is only
counted as a step if legal representation is mandatory. Notifications of interlocu-
tory decisions that do not require further interaction between the parties and the
judge or court officer (as when the clerk makes an entry into the notification book)
are not counted as separate steps since they are ancillary to the decision.
476 QUARTERLY JOURNAL OF ECONOMICS

issue a decision following a discussion, and (3) the judgment

would be enforced. As the evidence below shows, in some coun-
tries checks can be collected and tenants evicted in just 8 or 9
steps, while in others it takes 40 to 45 steps—a far cry from the
neighbor model. We aggregate these counts into an index of
“independent procedural actions” and normalize the index to fall
between zero and one based on the minimum and the maximum
number of actions among countries.

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Having assembled the data, we combine the seven subin-
dexes into the index of formalism. We scale each subindex to fall
between zero and one, so the formalism index falls between zero
and seven, with seven representing, according to our conception,
the greatest distance from the neighbor model. The exact method
of the construction of the formalism index is not crucial, since the
various subindexes generally point in the same direction as to
which countries regulate adjudication more heavily.

III.C. Other Variables

Our data contain information on the quality of dispute reso-
lution. One measure of quality is an estimate—in calendar
days— of duration of dispute resolution by the lawyers who com-
pleted the questionnaires. Duration is measured as the number of
calendar days counted from the moment the plaintiff files the
lawsuit in court, until the moment of actual repossession (evic-
tion) or payment (check). This measure includes both the days
where actions take place and waiting periods between actions.
The participating firms make separate estimates of the average
duration until the completion of service of process, the issuance of
judgment (duration of trial), and the moment of payment or repos-
session (duration of enforcement).6 To the extent that we are inter-
ested in the ability of ordinary persons to use the legal system, these
estimates of duration are highly relevant for efficiency.
In addition to the data from the questionnaires, we use data
from surveys of business people on the quality of the legal system.
These include measures of the enforceability of contracts, corrup-
tion, and “law and order.” In addition, we use information from
small firm assessments of various aspects of the quality of the
legal system, including consistency, honesty, and fairness, con-

6. Law firms also provide us with estimates of the minimum and the maxi-
mum amount of time in calendar days each case could take given its specifics. This
request helped lawyers to focus on the average length of time and not just think
about the worst or best case they had encountered.
 COURTS 477

tained in the World Business Environment Survey. These data

will be used to shed light on the crucial question: does formalism
secure justice?
Finally, we assemble some data to examine alternative hy-
potheses concerning the determinants of judicial quality. From
Lex Mundi member firms, we get data on whether judges face
mandatory time deadlines, whether lawyers are allowed to
charge contingency fees, and whether losers in civil disputes must

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pay the winners’ legal fees. We also obtain data on 1999 per
capita income in each country, the average years of schooling, and
ethno-linguistic and religious fractionalization. Fractionalization
measures are used as controls because studies find that fraction-
alization has adverse consequences for institutional performance
[La Porta et al. 1999; Alesina et al. 2003].

IV. FORMALISM AND ITS DETERMINANTS

Table II presents our data on procedural formalism, with
subindexes and the overall index. Table IIa focuses on eviction,
and Table IIb on check collection. Countries are arranged by legal
origin, and we report the means for each legal origin and the tests
of the differences in these means. For both check collection and
eviction, common law countries have least formalized, and
French civil law countries most formalized, dispute resolution,
with other legal origins in the middle. For eviction, the differ-
ences hold for all subindexes, but are stronger in some areas
(legal justification, number of independent procedural actions)
than in others (evidence, superior review). The differences in
formalism among civil law countries (French, German, socialist,
and Scandinavian) are less pronounced, and typically not as
statistically significant (except that German and Scandinavian
origin countries regulate less heavily than socialist and French
ones). For check collection the pattern of results is similar, except
that one of the subindexes is lower in French civil law countries than
in common law countries. The rankings of legal origins hold also
within per capita income quartiles. These findings are broadly con-
sistent with the thrust of the comparative law literature.
Table III examines the consistency of this evidence across the
various subindexes measuring alternative aspects of procedural
formalism, as well as across the two cases. The evidence shows a
clear picture of consistency. The various subindexes are positively
correlated with the overall index within each case. Moreover,
 TABLE IIa
478
EVICTION OF A TENANT
This table classifies countries by legal origin and shows the professionals versus laymen, written versus oral elements, legal
justification, statutory regulation of evidence, control of superior review, and engagement formalities indices, and the normalized
number of independent procedural actions for the case of eviction of a tenant. All variables are described in Table I, and the data can
be found at http://iicg.som.yale.edu/.

Written Statutory Control

versus regulation of Independent
Professionals oral Legal of superior Engagement procedural Formalism
versus laymen elements justification evidence review formalities actions index

English legal origin

Anguilla 0.67 0.88 0.67 0.13 1.00 0.67 0.28 4.28

Australia 0.00 0.57 0.33 0.25 0.67 0.00 0.17 1.99
Bahrain 0.33 0.63 1.00 0.38 1.00 0.33 0.25 3.92
Bangladesh 0.33 0.63 0.67 0.13 1.00 0.33 0.28 3.36
Barbados 0.67 0.50 0.00 0.25 0.67 0.00 0.25 2.33
Belize 0.00 0.38 0.67 0.38 0.67 0.00 0.00 2.08
Bermuda 0.33 0.38 0.00 0.25 0.33 0.00 0.03 1.32
Botswana 0.67 0.75 0.67 0.38 0.67 0.67 0.28 4.07
BVI 0.67 0.50 0.33 0.38 0.67 0.00 0.33 2.88
Canada 0.00 0.75 0.33 0.38 0.33 0.33 0.19 2.32
QUARTERLY JOURNAL OF ECONOMICS

Cayman 0.67 0.63 0.67 0.25 0.67 0.33 0.39 3.60

Cyprus 0.67 0.63 0.67 0.38 0.67 0.33 0.17 3.50
Ghana 0.67 0.50 0.00 0.50 0.33 0.33 0.36 2.69
Gibraltar 0.67 0.75 0.33 0.13 0.33 0.00 0.31 2.51
Grenada 0.33 0.38 0.67 0.38 0.67 0.33 0.11 2.86
Hong Kong 0.33 0.75 1.00 0.13 0.67 0.00 0.25 3.13

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India 0.33 0.75 1.00 0.38 0.33 0.33 0.39 3.51
Ireland 0.67 0.71 0.33 0.13 1.00 0.00 0.36 3.20
Israel 0.67 0.88 1.00 0.50 0.67 0.00 0.19 3.90
Jamaica 0.67 0.38 0.33 0.25 0.67 0.00 0.08 2.38
Kenya 0.33 0.75 0.33 0.38 0.67 0.00 0.39 2.85
Malawi 0.33 0.63 0.67 0.38 0.67 0.33 0.14 3.14
Malaysia 0.67 0.63 0.33 0.50 0.67 0.00 0.42 3.21
Namibia 0.67 0.63 0.67 0.38 1.00 0.33 0.19 3.86
New Zealand 0.00 0.50 0.33 0.00 0.33 0.00 0.08 1.25
Nigeria 0.33 0.63 0.33 0.38 1.00 0.00 0.42 3.08
Pakistan 0.67 0.63 0.67 0.25 1.00 0.00 0.53 3.74
Singapore 0.67 0.63 0.33 0.38 0.67 0.00 0.44 3.11
South Africa 0.67 0.50 0.67 0.38 1.00 0.33 0.14 3.68
Sri Lanka 0.67 0.63 1.00 0.38 1.00 0.00 0.22 3.89
St. Vincent 0.67 0.50 0.67 0.38 0.67 0.67 0.31 3.85
Swaziland 0.67 0.63 1.00 0.25 1.00 0.00 0.19 3.74
COURTS

Tanzania 0.33 0.63 0.33 0.50 0.67 0.33 0.11 2.90

Thailand 0.67 0.88 1.00 0.38 0.67 0.33 0.33 4.25
Trinidad and Tobago 0.67 0.63 0.00 0.25 0.33 0.00 0.28 2.15
Turks and Caicos 0.67 0.63 0.00 0.38 0.67 0.00 0.47 2.81
UAE 0.00 0.50 0.33 0.00 0.00 0.33 0.28 1.44
Uganda 0.00 1.00 0.33 0.38 0.67 0.00 0.14 2.51
United Kingdom 0.67 0.75 0.33 0.00 0.33 0.00 0.14 2.22
USA 0.33 0.63 1.00 0.13 0.67 0.00 0.22 2.97
Zambia 0.67 0.50 0.33 0.38 0.67 0.33 0.19 3.07
Zimbabwe 0.33 0.63 0.67 0.38 0.67 0.33 0.11 3.11
Mean 0.48 0.63 0.52 0.30 0.67 0.17 0.25 3.02
479

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 TABLE IIa
480
(CONTINUED)

Written Statutory Control

versus regulation of Independent
Professionals oral Legal of superior Engagement procedural Formalism
versus laymen elements justification evidence review formalities actions index

Socialist legal origin

Bulgaria 0.67 0.88 1.00 0.25 1.00 0.33 0.39 4.51

China 0.67 0.75 0.33 0.38 1.00 0.00 0.28 3.40
Croatia 0.67 0.63 1.00 0.25 0.67 0.00 0.22 3.43
Czech Republic 0.67 0.38 1.00 0.25 1.00 0.00 0.25 3.54
Estonia 0.67 0.75 1.00 0.38 1.00 0.67 0.28 4.74
Georgia 0.67 0.63 0.67 0.25 1.00 0.00 0.31 3.51
Hungary 0.67 0.75 1.00 0.13 0.67 0.00 0.25 3.46
Kazakhstan 0.67 0.63 0.67 0.38 1.00 0.00 0.67 4.00
Latvia 0.67 0.63 1.00 0.38 1.00 0.00 0.19 3.86
Lithuania 0.67 0.75 1.00 0.38 1.00 0.00 0.42 4.21
Poland 0.67 0.75 1.00 0.50 1.00 0.00 0.17 4.08
Romania 0.67 0.75 1.00 0.50 1.00 0.00 0.56 4.47
Russia 0.67 0.50 0.67 0.38 1.00 0.00 0.11 3.32
Slovenia 0.67 0.75 1.00 0.38 1.00 0.00 0.47 4.26
QUARTERLY JOURNAL OF ECONOMICS

Ukraine 0.67 0.75 0.33 0.63 1.00 0.00 0.22 3.60

Vietnam 0.67 0.50 0.00 0.25 1.00 0.00 0.42 2.83
Mean 0.67 0.67 0.79 0.35 0.96 0.06 0.32 3.83

French legal origin

Argentina 1.00 1.00 1.00 0.13 1.00 0.67 0.69 5.49

Belgium 0.67 0.75 0.33 0.25 0.67 0.33 0.17 3.17

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Bolivia 1.00 1.00 0.67 0.25 1.00 0.67 0.53 5.11
Brazil 1.00 0.63 1.00 0.38 0.67 0.00 0.17 3.83
Chile 1.00 0.88 0.67 0.50 0.67 0.67 0.42 4.79
Colombia 0.67 1.00 1.00 0.25 0.00 0.33 0.69 3.94
Costa Rica 0.67 0.86 1.00 0.50 1.00 0.67 0.36 5.05
Cote D’Ivoire 0.67 0.50 0.67 0.25 0.67 0.67 0.22 3.64
Dominican Republic 0.33 0.63 1.00 0.38 1.00 0.67 0.36 4.36
Ecuador 0.67 0.88 1.00 0.63 0.67 0.33 0.47 4.64
Egypt 0.67 0.63 1.00 0.50 0.33 0.33 0.14 3.60
El Salvador 0.33 1.00 0.67 0.75 0.67 0.67 0.17 4.25
France 0.33 0.75 1.00 0.13 0.67 0.67 0.06 3.60
Greece 1.00 1.00 1.00 0.50 0.00 0.67 0.14 4.31
Guatemala 1.00 1.00 1.00 0.75 1.00 0.67 0.36 5.78
Honduras 0.67 1.00 1.00 0.63 0.67 0.33 0.39 4.68
Indonesia 0.33 0.88 0.67 0.50 0.67 0.33 0.50 3.88
Italy 1.00 1.00 0.67 0.13 0.67 0.67 0.11 4.24
COURTS

Jordan 0.67 0.63 0.67 0.50 0.00 0.33 0.58 3.38

Kuwait 0.33 0.88 1.00 0.25 1.00 1.00 0.14 4.69
Lebanon 1.00 0.88 1.00 0.50 1.00 0.67 0.53 5.57
Luxembourg 0.33 0.86 0.67 0.50 1.00 0.00 0.31 3.66
Malta 0.67 0.63 0.67 0.38 0.67 0.33 0.08 3.42
Mexico 0.33 0.88 1.00 0.50 0.67 0.67 0.78 4.82
Monaco 0.33 0.63 0.67 0.25 0.33 0.67 0.06 2.93
Morocco 0.67 1.00 0.67 0.63 1.00 0.67 0.17 4.79
Mozambique 1.00 0.75 1.00 0.38 1.00 0.67 0.36 5.15
Netherlands 0.33 0.63 0.67 0.13 0.67 0.33 0.25 3.00
Netherlands Antilles 0.67 0.63 0.33 0.25 0.67 0.67 0.42 3.63
Panama 1.00 1.00 1.00 0.25 1.00 0.67 1.00 5.92
Paraguay 0.67 0.86 1.00 0.63 0.67 0.67 0.61 5.09
481

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 TABLE IIa
482
(CONTINUED)

Written Statutory Control

versus regulation of Independent
Professionals oral Legal of superior Engagement procedural Formalism
versus laymen elements justification evidence review formalities actions index

Peru 1.00 0.88 1.00 0.38 1.00 0.67 0.50 5.42

Philippines 1.00 1.00 1.00 0.50 0.33 0.67 0.50 5.00
Portugal 1.00 0.75 1.00 0.38 1.00 0.00 0.42 4.54
Senegal 0.67 0.63 0.33 0.63 0.67 0.67 0.31 3.89
Spain 0.67 0.88 1.00 0.63 0.67 0.67 0.31 4.81
Tunisia 0.67 0.75 0.67 0.25 0.67 0.67 0.22 3.89
Turkey 0.67 0.63 1.00 0.75 0.00 0.00 0.44 3.49
Uruguay 1.00 0.50 0.67 0.13 0.67 0.33 0.69 3.99
Venezuela 1.00 1.00 1.00 0.50 1.00 0.67 0.64 5.81
Mean 0.72 0.81 0.83 0.42 0.69 0.53 0.38 4.38

German legal origin

Austria 0.67 0.86 1.00 0.13 0.67 0.00 0.31 3.62

Germany 0.33 0.88 1.00 0.50 0.67 0.00 0.39 3.76
Japan 0.67 1.00 1.00 0.25 0.67 0.00 0.14 3.72
QUARTERLY JOURNAL OF ECONOMICS

Korea 0.67 0.88 0.33 0.13 0.67 0.33 0.33 3.33

Switzerland 0.67 0.63 1.00 0.25 1.00 0.33 0.08 3.96
Taiwan 0.67 0.50 0.67 0.38 0.67 0.00 0.17 3.04
Mean 0.61 0.79 0.83 0.27 0.72 0.11 0.24 3.57

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Scandinavian legal origin

Denmark 0.67 0.75 0.67 0.13 1.00 0.00 0.39 3.60

Finland 0.33 0.50 0.67 0.25 0.67 0.00 0.11 2.53
Iceland 0.67 0.38 1.00 0.38 0.67 0.33 0.06 3.47
Norway 0.67 0.75 0.67 0.13 1.00 0.33 0.17 3.71
Sweden 0.67 0.75 0.33 0.25 1.00 0.00 0.31 3.31
Mean 0.60 0.63 0.67 0.23 0.87 0.13 0.21 3.32
Mean for all countries 0.58 0.71 0.68 0.33 0.71 0.27 0.30 3.58
Tests of means (t-stats)
English versus Socialist ⫺3.08a ⫺1.13 ⫺2.89a ⫺1.31 ⫺4.57a 1.87c ⫺1.98c ⴚ3.87a
a
English versus French ⫺4.34a ⫺5.61a ⫺5.20a ⫺3.21 ⫺0.41 ⫺7.07a ⫺3.38a ⴚ7.77a
English versus German ⫺1.31 ⫺2.53b ⫺2.29b 0.50 ⫺0.54 0.70 0.22 ⴚ1.74c
English versus
Scandinavian ⫺1.10 0.01 ⫺0.98 1.20 ⫺1.77c 0.42 0.72 ⴚ0.86
Socialist versus French ⫺0.78 ⫺3.14a ⫺0.57 ⫺1.27 3.38a ⫺7.00a ⫺0.94 ⴚ2.49b
COURTS

Socialist versus German 1.71 ⫺1.68 ⫺0.28 1.31 4.12a ⫺0.57 1.29 1.10
Socialist versus
Scandinavian 1.90c 0.65 0.80 2.07c 1.36 ⫺0.76 1.57 1.93c
French versus German 0.98 0.35 0.00 1.81c ⫺0.24 4.09a 1.56 2.37b
French versus
Scandinavian 0.99 2.44b 1.63 2.23b ⫺1.25 3.55a 1.72c 2.82a
German versus
Scandinavian 0.13 1.48 1.06 0.59 ⫺1.51 ⫺0.21 0.39 1.04

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

483

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 TABLE IIb
484
COLLECTION OF A CHECK
This table classifies countries by legal origin and shows the professionals versus laymen, written versus oral elements, legal
justification, statutory regulation of evidence, control of superior review, and engagement formalities indices, and the normalized
number of independent procedural actions for the case of collection of a check. All variables are described in Table I, and the data can
be found at http://iicg.som.yale.edu/.

Written Statutory Control

versus regulation of Independent
Professionals oral Legal of superior Engagement procedural Formalism
versus laymen elements justification evidence review formalities actions index

English legal origin

Anguilla 0.00 0.38 0.33 0.13 1.00 0.00 0.13 1.96

Australia 0.00 0.50 0.33 0.25 0.67 0.00 0.05 1.80
Bahrain 0.33 0.75 1.00 0.75 1.00 0.33 0.24 4.40
Bangladesh 0.67 0.63 0.67 0.13 1.00 0.00 0.16 3.24
Barbados 0.33 0.38 0.33 0.25 0.67 0.33 0.08 2.37
Belize 0.00 0.38 0.00 0.38 0.67 0.00 0.00 1.42
Bermuda 0.33 0.38 0.00 0.25 0.33 0.33 0.16 1.78
Botswana 0.67 0.75 0.67 0.38 0.67 0.67 0.29 4.08
BVI 0.33 0.38 0.00 0.38 1.00 0.33 0.11 2.52
Canada 0.33 0.50 0.00 0.38 0.67 0.00 0.21 2.09
QUARTERLY JOURNAL OF ECONOMICS

Cayman 0.67 0.63 0.33 0.25 0.67 0.00 0.21 2.75

Cyprus 0.67 0.63 0.67 0.38 0.67 0.33 0.34 3.68
Ghana 0.67 0.50 0.00 0.50 0.33 0.33 0.32 2.65
Gibraltar 0.67 0.75 0.33 0.13 0.33 0.00 0.18 2.39
Grenada 0.33 0.38 0.67 0.38 0.67 0.33 0.05 2.80
Hong Kong 0.00 0.63 0.00 0.00 0.00 0.00 0.11 0.73

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India 0.67 0.63 1.00 0.38 0.33 0.00 0.34 3.34
Ireland 0.67 0.57 0.33 0.13 0.67 0.00 0.26 2.63
Israel 0.33 0.88 0.67 0.50 0.67 0.00 0.26 3.30
Jamaica 0.67 0.38 0.33 0.25 0.67 0.00 0.05 2.34
Kenya 0.67 0.63 0.33 0.38 0.67 0.00 0.42 3.09
Malawi 0.67 0.63 0.33 0.25 0.67 0.33 0.08 2.95
Malaysia 0.33 0.50 0.00 0.50 0.67 0.00 0.34 2.34
Namibia 0.67 0.63 0.67 0.38 1.00 0.33 0.16 3.82
New Zealand 0.00 0.50 0.33 0.00 0.67 0.00 0.08 1.58
Nigeria 0.33 0.63 0.33 0.38 0.67 0.33 0.53 3.19
Pakistan 0.67 0.63 0.67 0.25 1.00 0.00 0.55 3.76
Singapore 0.33 0.38 0.00 0.50 0.67 0.33 0.29 2.50
South Africa 0.00 0.38 0.33 0.25 0.67 0.00 0.05 1.68
Sri Lanka 0.67 0.86 0.67 0.38 1.00 0.00 0.21 3.78
St. Vincent 1.00 0.43 0.67 0.38 0.67 0.33 0.16 3.63
Swaziland 0.67 0.63 1.00 0.25 1.00 0.00 0.16 3.70
COURTS

Tanzania 0.67 0.86 0.67 0.50 0.67 0.33 0.13 3.82

Thailand 0.33 0.50 0.67 0.38 0.67 0.33 0.26 3.14
Trinidad and Tobago 0.33 0.63 0.00 0.25 0.33 0.00 0.26 1.80
Turks and Caicos 0.00 0.25 0.00 0.38 1.00 0.00 0.24 1.86
UAE 1.00 0.88 1.00 0.13 0.33 0.00 0.47 3.81
Uganda 0.00 0.71 0.67 0.38 0.67 0.00 0.18 2.61
United Kingdom 0.67 0.71 0.33 0.13 0.67 0.00 0.08 2.58
USA 0.33 0.75 0.33 0.13 1.00 0.00 0.08 2.62
Zambia 0.00 0.57 0.33 0.38 0.67 0.00 0.18 2.13
Zimbabwe 0.33 0.63 0.67 0.38 0.67 0.33 0.11 3.11
Mean 0.43 0.58 0.42 0.31 0.68 0.13 0.20 2.76
485

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 TABLE IIb
486
(CONTINUED)

Written Statutory Control

versus regulation of Independent
Professionals oral Legal of superior Engagement procedural Formalism
versus laymen elements justification evidence review formalities actions index

Socialist legal origin

Bulgaria 0.67 0.88 1.00 0.25 1.00 0.33 0.45 4.57

China 0.67 0.75 0.33 0.38 1.00 0.00 0.29 3.41
Croatia 0.67 0.75 1.00 0.25 0.67 0.00 0.29 3.62
Czech Republic 0.67 0.83 1.00 0.38 1.00 0.00 0.18 4.06
Estonia 0.67 0.75 1.00 0.38 1.00 0.33 0.24 4.36
Georgia 0.67 0.63 0.67 0.25 0.67 0.00 0.21 3.09
Hungary 0.67 0.75 0.67 0.13 1.00 0.00 0.21 3.42
Kazakhstan 0.67 0.75 0.67 0.50 1.00 0.33 0.84 4.76
Latvia 0.67 0.63 1.00 0.38 1.00 0.00 0.26 3.93
Lithuania 0.67 0.75 1.00 0.50 1.00 0.00 0.55 4.47
Poland 0.67 0.88 1.00 0.38 1.00 0.00 0.24 4.15
Romania 0.67 0.75 1.00 0.50 1.00 0.00 0.50 4.42
Russia 0.67 0.50 0.67 0.38 1.00 0.00 0.18 3.39
Slovenia 0.67 0.75 1.00 0.50 1.00 0.00 0.34 4.26
QUARTERLY JOURNAL OF ECONOMICS

Ukraine 0.67 0.75 0.33 0.63 1.00 0.00 0.29 3.66

Vietnam 0.67 0.50 0.33 0.25 1.00 0.00 0.50 3.25
Mean 0.67 0.72 0.79 0.38 0.96 0.06 0.35 3.93

French legal origin

Argentina 1.00 1.00 1.00 0.13 1.00 0.67 0.61 5.40

Belgium 0.33 0.75 0.33 0.13 0.67 0.33 0.18 2.73

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Bolivia 1.00 1.00 0.67 0.38 1.00 1.00 0.71 5.75
Brazil 0.33 0.50 1.00 0.38 0.67 0.00 0.18 3.06
Chile 1.00 0.75 0.67 0.50 0.67 0.67 0.32 4.57
Colombia 0.67 1.00 1.00 0.38 0.00 0.33 0.74 4.11
Costa Rica 1.00 1.00 1.00 0.50 1.00 0.67 0.32 5.48
Cote D’Ivoire 0.67 0.63 0.67 0.13 0.67 0.67 0.24 3.65
Dominican Republic 0.33 0.75 0.67 0.38 1.00 0.67 0.29 4.08
Ecuador 1.00 1.00 0.67 0.63 0.67 0.33 0.63 4.92
Egypt 1.00 0.75 1.00 0.50 0.00 0.33 0.21 3.79
El Salvador 0.33 0.88 1.00 0.88 0.67 0.67 0.18 4.60
France 0.33 0.75 1.00 0.13 0.33 0.67 0.03 3.23
Greece 0.67 1.00 1.00 0.50 0.00 0.67 0.16 3.99
Guatemala 1.00 1.00 1.00 0.75 1.00 0.67 0.26 5.68
Honduras 0.67 1.00 1.00 0.63 0.67 0.33 0.61 4.90
Indonesia 0.33 0.88 0.67 0.50 0.67 0.33 0.53 3.90
Italy 0.67 0.86 1.00 0.00 0.67 0.67 0.18 4.04
COURTS

Jordan 0.67 0.75 0.67 0.50 0.00 0.33 0.61 3.52

Kuwait 0.67 0.88 0.67 0.13 0.67 0.67 0.21 3.88
Lebanon 1.00 0.75 0.67 0.63 1.00 0.33 0.47 4.85
Luxembourg 0.33 0.71 0.67 0.50 1.00 0.00 0.34 3.56
Malta 0.00 0.63 0.33 0.38 0.67 0.33 0.11 2.44
Mexico 0.33 0.88 1.00 0.50 0.67 0.33 1.00 4.71
Monaco 0.33 0.71 0.33 0.25 0.33 0.67 0.11 2.74
Morocco 1.00 1.00 0.67 0.50 0.67 0.67 0.21 4.71
Mozambique 0.67 0.75 1.00 0.50 0.67 0.67 0.24 4.49
Netherlands 0.33 0.63 0.67 0.13 0.67 0.33 0.32 3.07
Netherlands Antilles 0.67 0.88 0.33 0.25 0.33 0.00 0.39 2.85
Panama 1.00 1.00 1.00 0.25 1.00 0.67 0.92 5.84
Paraguay 1.00 1.00 1.00 0.63 0.67 0.67 0.95 5.91
487

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 TABLE IIb
488
(CONTINUED)

Written Statutory Control

versus regulation of Independent
Professionals oral Legal of superior Engagement procedural Formalism
versus laymen elements justification evidence review formalities actions index

Peru 1.00 0.88 1.00 0.38 1.00 0.67 0.68 5.60

Philippines 1.00 1.00 1.00 0.50 0.33 0.67 0.50 5.00
Portugal 0.67 0.75 1.00 0.50 0.67 0.00 0.34 3.93
Senegal 0.67 0.88 0.67 0.63 0.67 0.67 0.55 4.72
Spain 1.00 1.00 1.00 0.63 0.67 0.67 0.29 5.25
Tunisia 0.67 1.00 0.67 0.25 0.67 0.67 0.13 4.05
Turkey 0.00 1.00 0.67 0.63 0.00 0.00 0.24 2.53
Uruguay 1.00 0.50 0.67 0.13 0.67 0.33 0.76 4.05
Venezuela 1.00 1.00 1.00 0.50 1.00 0.67 0.84 6.01
Mean 0.68 0.85 0.80 0.42 0.63 0.49 0.41 4.29

German legal origin

Austria 0.67 0.86 1.00 0.38 0.33 0.00 0.29 3.52

Germany 0.33 0.88 1.00 0.50 0.67 0.00 0.13 3.51
Japan 0.33 0.88 0.67 0.25 0.67 0.00 0.18 2.98
QUARTERLY JOURNAL OF ECONOMICS

Korea 0.67 0.88 0.33 0.13 0.67 0.33 0.37 3.37

Switzerland 0.67 0.63 0.67 0.38 0.33 0.33 0.13 3.13
Taiwan 0.33 0.50 0.67 0.38 0.33 0.00 0.16 2.37
Mean 0.50 0.77 0.72 0.33 0.50 0.11 0.21 3.15

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Scandinavian legal origin

Denmark 0.33 0.63 0.00 0.13 1.00 0.33 0.13 2.55

Finland 0.67 0.63 0.67 0.25 0.67 0.00 0.26 3.14
Iceland 0.67 0.63 1.00 0.38 1.00 0.33 0.13 4.13
Norway 0.33 0.75 0.67 0.13 1.00 0.00 0.08 2.95
Sweden 0.67 0.75 0.33 0.25 0.67 0.00 0.32 2.98
Mean 0.53 0.68 0.53 0.23 0.87 0.13 0.18 3.15
Mean for all countries 0.57 0.71 0.64 0.36 0.70 0.25 0.30 3.53
Tests of means (t-stats)
English versus Socialist ⫺3.29a ⫺3.38a ⫺4.19a ⫺1.55 ⫺4.53a 1.45 ⫺3.38a ⴚ5.24a
a
English versus French ⫺3.85a ⫺7.97a ⫺6.29a ⫺2.71 0.82 ⫺7.42a ⫺4.63a ⴚ7.52a
English versus German ⫺0.59 ⫺2.73a ⫺2.25b ⫺0.37 1.84c 0.30 ⫺0.11 ⴚ1.12
English versus
Scandinavian ⫺0.79 ⫺1.35 ⫺0.75 1.22 ⫺1.70c 0.02 0.33 ⴚ1.03
Socialist versus French ⫺0.21 ⫺3.05a ⫺0.12 ⫺0.74 4.07a ⫺6.47a ⫺0.92 ⴚ1.36
COURTS

Socialist versus German 3.81a ⫺0.73 0.55 0.67 7.13a ⫺0.70 1.78c 3.23a
Socialist versus
Scandinavian 3.11a 0.93 1.71 2.35b 1.36 ⫺0.95 1.95c 2.81b
French versus German 1.40 1.24 0.78 0.96 1.02 3.58a 1.88c 2.72a
French versus
Scandinavian 1.05 2.55b 2.32b 2.05b ⫺1.64 3.09a 1.94c 2.45b
Germany versus
Scandinavian ⫺0.30 1.17 0.99 1.51 ⫺3.32a ⫺0.21 0.44 ⴚ0.02

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

489

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 TABLE III
CORRELATIONS OF FORMALISM INDEX AND ITS COMPONENTS
490

Professionals Written Statutory Control of Independent

Formalism versus versus oral Legal regulation superior Engagement procedural
Indices index laymen elements justification of evidence review formalities actions

Panel A: Eviction
Professionals versus laymen 0.6420a 1.0000
Written versus oral elements 0.6614a 0.3073c 1.0000
Legal justification 0.6840a 0.2598 0.3976a 1.0000
Statutory regulation of evidence 0.4161a 0.1471 0.2390 0.2049 1.0000
Control of superior review 0.4573a 0.2342 0.1009 0.2121 0.0090 1.0000
Engagement formalities 0.5988a 0.2349 0.4041a 0.2795 0.1995 0.0037 1.0000
Independent procedural actions 0.5353a 0.3952a 0.3858a 0.1799 0.1546 0.1110 0.1713 1.0000

Panel B: Check
Professionals versus laymen 0.7625a 1.0000
Written versus oral elements 0.7305a 0.5090a 1.0000
Legal justification 0.7573a 0.4921a 0.6083a 1.0000
Statutory regulation of evidence 0.4800a 0.1845 0.3052c 0.3184b 1.0000
Control of superior review 0.3264b 0.1255 ⫺0.0439 0.1051 0.0316 1.0000
Engagement formalities 0.6125a 0.4082a 0.4391a 0.2977c 0.2296 ⫺0.0296 1.0000
Independent procedural actions 0.6517a 0.4836a 0.4538a 0.3406b 0.2869 0.0957 0.2909c 1.0000

Panel C: Correlations between eviction and check indices

Formalism index 0.8257a
QUARTERLY JOURNAL OF ECONOMICS

Professionals versus laymen 0.5229a

Written versus oral elements 0.7054a
Legal justification 0.7502a
Statutory regulation of evidence 0.9086a
Control of superior review 0.7866a
Engagement formalities 0.8126a
Independent procedural actions 0.8575a

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

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 COURTS 491

across the two types of cases, the same subindexes are strongly
positively correlated with each other. The correlation of the for-
malism index between check collection and eviction is 0.83. In
contrast to the general pattern, the evidence and superior review
subindexes are uncorrelated with the others. For most aspects of
formalism, however, it appears that some countries regulate dis-
pute resolution more heavily than others.
In Table IV we examine the determinants of formalism look-

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ing at the subindexes and the overall index. Panel A deals with
eviction, and Panel B with check collection. The omitted dummy
is common law (English) legal origin. Richer countries exhibit
lower levels of procedural formalism than poorer ones. The data
for most subindexes and the overall index also show that dispute
resolution in socialist and French civil law countries is more
formalized than in common law countries, even holding per capita
income constant. The point estimates in the regressions are con-
sistent with the means in Table II, yielding roughly the same
order of legal origins, and in most cases the coefficients are
statistically significant. Dispute resolution in German and Scan-
dinavian origin countries also appears to be more formalized than
in common law countries, although the results for subindexes are
generally statistically insignificant. The incremental R 2 in ex-
plaining the formalism index from the legal origin dummies is 40
percent: nearly half of the residual variation in formalism (hold-
ing per capita income constant) is explained by the legal tradi-
tion. These results are robust to inclusion of other controls such
as latitude, average years of schooling, and ethno-linguistic and
religious fractionalization.7
These results provide striking support of the comparative law
hypothesis that there are systematic differences in legal procedure
across legal families. Specifically, civil law countries have more
formal dispute resolution than do common law countries.

V. DETERMINANTS OF THE QUALITY OF COURTS

In this section we evaluate the alternative theories of the
determinants of the quality of courts. Table V presents the raw

7. We also consider the hypothesis that the influence of Catholicism, with its
protection of creditors, shapes judicial formalism. Although the percentage of a
country’s population that is Catholic is a statistically significant determinant of
formalism, this variable becomes insignificant in a horse race with legal origin,
which remains important.
 TABLE IV
492
INDICES REGRESSIONS
Ordinary least squares regressions of the cross section of countries. The dependent variables are the indices of formalism and their
component. Robust standard errors are in parentheses. All variables are described in Table I, and the data can be found at http://
iicg.som.yale.edu/.

Independent variables:

Socialist French German Scandinavian

Log GNP legal legal legal legal N
Dependent variables: per capita origin origin origin origin Constant [R 2 ]

Panel A: Eviction of a tenant

Formalism index ⫺0.1254b 0.7437a 1.3681a 0.7842a 0.5729b 4.0386a 109

(0.0489) (0.1791) (0.1712) (0.2257) (0.2677) (0.3789) [0.44]
Professionals versus ⫺0.0115 0.1843a 0.2410a 0.1556b 0.1482c 0.5697a 109
laymen (0.0180) (0.0387) (0.0562) (0.0744) (0.0851) (0.1469) [0.20]
Written versus oral ⫺0.0047 0.0435 0.1887a 0.1714b 0.0092 0.6644a 109
elements (0.0102) (0.0395) (0.0342) (0.0774) (0.0790) (0.0865) [0.26]
Legal justification 0.0057 0.2710a 0.3092a 0.2991b 0.1306 0.4769a 109
(0.0216) (0.0902) (0.0602) (0.1273) (0.1203) (0.1776) [0.22]
Statutory regulation ⫺0.0435a 0.0274 0.1171a 0.0489 0.0169 0.6557a 109
of evidence (0.0102) (0.0357) (0.0333) (0.0660) (0.0524) (0.0808) [0.26]
Control of superior ⫺0.0276 0.2768a 0.0263 0.1053 0.2585a 0.8914a 109
review (0.0171) (0.0464) (0.0617) (0.0736) (0.0931) (0.1410) [0.17]
QUARTERLY JOURNAL OF ECONOMICS

Engagement ⫺0.0218 ⫺0.1239b 0.3514a ⫺0.0242 0.0049 0.3520a 109

formalities (0.0141) (0.0571) (0.0497) (0.0772) (0.0876) (0.1190) [0.46]
Independent ⫺0.0221b 0.0647 0.1343a 0.0281 0.0045 0.4285a 109
procedural actions (0.0107) (0.0424) (0.0398) (0.0520) (0.0640) (0.0909) [0.17]

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 Panel B: Check collection
a a a
Formalism index ⫺0.2072 1.0579 1.5422 0.7622a 0.8339a 4.4465a 109
(0.0501) (0.1915) (0.1922) (0.2464) (0.2977) (0.4042) [0.48]
Professionals versus ⫺0.0420b 0.2154a 0.2568a 0.1473 0.1939b 0.7712a 109
laymen (0.0185) (0.0462) (0.0656) (0.0899) (0.0952) (0.1555) [0.21]
Written versus oral ⫺0.0162 0.1386a 0.2751a 0.2207a 0.1330a 0.7090a 109
elements (0.0099) (0.0373) (0.0343) (0.0726) (0.0467) (0.0767) [0.42]
Legal justification ⫺0.0328c 0.3533a 0.3809a 0.3609a 0.1824 0.6884a 109
(0.0193) (0.0852) (0.0586) (0.1191) (0.1684) (0.1615) [0.32]
Statutory regulation ⫺0.0402a 0.0437 0.1080a 0.0965 0.0009 0.6376a 109
of evidence (0.0115) (0.0398) (0.0372) (0.0656) (0.0557) (0.0915) [0.20]
Control of superior ⫺0.0131 0.2687a ⫺0.0486 ⫺0.1589c 0.2119b 0.7893a 109
review (0.0169) (0.0456) (0.0615) (0.0864) (0.0940) (0.1357) [0.21]
Engagement ⫺0.0262c ⫺0.0866c 0.3580a 0.0235 0.0540 0.3485a 109
formalities (0.0138) (0.0446) (0.0482) (0.0745) (0.0852) (0.1175) [0.47]
Independent ⫺0.0366a 0.1247b 0.2120a 0.0723c 0.0576 0.5025a 109
procedural actions (0.0120) (0.0478) (0.0453) (0.0429) (0.0495) (0.1039) [0.26]
COURTS

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

493

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 TABLE V
494
DURATION IN PRACTICE
This table classifies countries by legal origin and shows the duration in practice for both eviction and check collection. All variables
are described in Table I, and the data can be found at http://iicg.som.yale.edu/.

Eviction of a tenant Check collection

Duration until Duration until

completion completion
of service Duration Duration of Total of service Duration Duration of Total
By legal origin of process of trial enforcement duration of process of trial enforcement duration

English legal origin

Anguilla 1 60 30 91 1 30 7 38
Australia 3 35 6 44 25 160 135 320
Bahrain 41 120 224 385 54 114 200 368
Bangladesh 30 180 180 390 30 180 60 270
Barbados 4 67 21 92 2 49 60 111
Belize 30 15 14 59 30 15 15 60
Bermuda 4 25 21 50 4 100 21 125
Botswana 14 42 7 63 14 42 21 77
BVI 2 42 14 58 42 21 120 183
Canada 5 21 17 43 21 250 150 421
QUARTERLY JOURNAL OF ECONOMICS

Cayman 30 136 14 180 30 60 30 120

Cyprus 60 120 180 360 60 120 180 360
Ghana 20 140 90 250 20 52 18 90
Gibraltar 160 50 14 224 160 50 14 224
Grenada 15 90 75 180 8 90 30 128
Hong Kong 7 35 150 192 7 40 14 61
India 142 24 46 212 7 53 46 106

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Ireland 11 60 50 121 11 60 60 130
Israel 3 272 135 410 60 120 135 315
Jamaica 45 46 14 105 45 87 70 202
Kenya 12 122 121 255 12 122 121 255
Malawi 3 30 2 35 3 90 15 108
Malaysia 60 90 120 270 15 15 60 90
Namibia 11 25 83 118 11 25 83 118
New Zealand 10 40 30 80 10 30 20 60
Nigeria 32 126 208 366 81 100 60 241
Pakistan 60 245 60 365 60 185 120 365
Singapore 9 40 11 60 11 18 19 47
South Africa 10 189 10 209 10 60 14 84
Sri Lanka 90 440 200 730 60 200 180 440
St. Vincent 3 302 30 335 3 22 10 35
Swaziland 5 28 7 40 5 28 7 40
Tanzania 7 180 30 217 7 90 30 127
COURTS

Thailand 30 510 90 630 30 90 90 210

Trinidad and Tobago 54 103 35 192 51 101 42 194
Turks and Caicos 14 100 60 174 14 30 30 74
UAE 14 180 90 285 14 365 180 559
Uganda 1 7 21 29 14 40 45 99
United Kingdom 14 73 28 115 14 73 14 101
USA 6 33 10 49 23 17 14 54
Zambia 14 90 7 111 14 120 54 188
Zimbabwe 8 180 9 197 8 180 9 197
Mean 26 112 61 199 26 88 62 176
495

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 TABLE V
496
(CONTINUED)

Eviction of a tenant Check collection

Duration until Duration until

completion completion
of service Duration Duration of Total of service Duration Duration of Total
By legal origin of process of trial enforcement duration of process of trial enforcement duration

Socialist legal origin

Bulgaria 60 450 150 660 10 250 150 410

China 15 105 60 180 15 120 45 180
Croatia 60 180 90 330 60 180 90 330
Czech Republic 60 90 180 330 30 60 180 270
Estonia 59 136 110 305 59 136 110 305
Georgia 30 60 90 180 30 60 90 180
Hungary 90 185 90 365 90 185 90 365
Kazakhstan 10 50 60 120 10 50 60 120
Latvia 27 41 11 79 28 41 120 189
Lithuania 30 90 30 150 30 60 60 150
Poland 90 720 270 1080 90 730 180 1000
Romania 30 140 103 273 30 105 90 225
QUARTERLY JOURNAL OF ECONOMICS

Russia 10 90 30 130 10 90 60 160

Slovenia 133 510 360 1003 133 510 360 1003
Ukraine 14 90 120 224 14 90 120 224
Vietnam 35 55 60 150 35 35 50 120
Mean 47 187 113 347 42 169 116 327

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French legal origin

Argentina 60 300 80 440 20 200 80 300

Belgium 3 60 57 120 0 20 100 120
Bolivia 14 60 20 94 14 360 90 464
Brazil 30 60 30 120 30 90 60 180
Chile 15 200 25 240 15 140 45 200
Colombia 139 279 82 500 165 216 146 527
Costa Rica 20 90 30 140 10 180 180 370
Cote D’Ivoire 8 120 2 130 8 82 60 150
Dominican Republic 30 90 90 210 35 90 90 215
Ecuador 38 40 30 108 38 235 60 333
Egypt 7 180 45 232 7 150 45 202
El Salvador 45 60 45 150 25 15 20 60
France 16 75 135 226 16 75 90 181
Greece 32 35 180 247 180 45 90 315
COURTS

Guatemala 10 180 90 280 10 120 90 220

Honduras 15 30 30 75 30 90 105 225
Indonesia 30 165 30 225 30 165 30 225
Italy 0 450 180 630 0 415 230 645
Jordan 7 100 30 137 7 100 40 147
Kuwait 3 65 25 93 7 240 110 357
Lebanon 1 912 60 973 1 540 180 721
Luxembourg 20 120 240 380 15 45 150 210
Malta 30 610 90 730 30 365 150 545
Mexico 20 60 100 180 33 99 151 283
Monaco 17 86 16 119 24 26 16 66
Morocco 15 365 365 745 15 135 42 192
Mozambique 30 450 60 540 30 300 210 540
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 TABLE V
498
(CONTINUED)

Eviction of a tenant Check collection

Duration until Duration until

completion completion
of service Duration Duration of Total of service Duration Duration of Total
By legal origin of process of trial enforcement duration of process of trial enforcement duration

Netherlands 17 7 28 52 17 7 15 39
Netherlands Antilles 15 70 20 105 20 36 37 93
Panama 36 50 48 134 76 86 35 197
Paraguay 12 50 140 202 25 32 165 222
Peru 41 135 70 246 81 135 165 441
Philippines 42 97 25 164 42 97 25 164
Portugal 20 280 30 330 20 280 120 420
Senegal 5 60 90 155 5 150 180 335
Spain 60 55 68 183 49 69 29 147
Tunisia 3 28 2 33 3 1 3 7
Turkey 30 180 90 300 30 30 45 105
Uruguay 120 120 90 330 150 120 90 360
Venezuela 30 300 30 360 30 300 30 360
Mean 27 167 72 266 34 147 90 272
QUARTERLY JOURNAL OF ECONOMICS

German legal origin

Austria 7 360 180 547 14 270 150 434

Germany 29 191 111 331 29 61 64 154
Japan 3 350 10 363 3 47 10 60
Korea 30 180 93 303 20 40 15 75
Switzerland 16 180 70 266 59 75 90 224

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Taiwan 30 120 180 330 30 60 120 210
Mean 19 230 107 357 26 92 75 193

Scandinavian legal
origin

Denmark 20 180 25 225 15 40 28 83

Finland 15 70 35 120 35 145 60 240
Iceland 22 12 30 64 71 105 75 251
Norway 7 300 58 365 7 50 30 87
Sweden 6 135 19 160 6 165 19 190
Mean 14 139 33 187 27 101 42 170
Mean for all
countries 29 151 74 254 31 122 80 234

Tests of means
COURTS

(t-stats)

English versus
Socialist ⫺2.05b ⫺1.84c ⫺2.46b ⫺2.42b ⫺1.74c ⫺2.37b ⫺2.91a ⫺2.85a
English versus
French ⫺0.16 ⫺1.66 ⫺0.77 ⫺1.64 ⫺0.93 ⫺2.66a ⫺2.16b ⫺2.94a
English versus
German 0.47 ⫺2.49b ⫺1.65 ⫺2.36b 0.03 ⫺0.13 ⫺0.52 ⫺0.30
English versus
Scandinavian 0.76 ⫺0.52 0.95 0.17 ⫺0.05 ⫺0.39 0.76 0.10
Socialist versus
French 2.23b 0.37 1.80c 1.14 0.71 0.51 1.33 0.91
499

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 TABLE V
500
(CONTINUED)

Eviction of a tenant Check collection

Duration until Duration until

completion completion
of service Duration Duration of Total of service Duration Duration of Total
By legal origin of process of trial enforcement duration of process of trial enforcement duration

Socialist versus
German 1.90c ⫺0.51 0.15 ⫺0.07 1.06 0.94 1.18 1.12
Socialist versus
Scandinavian 2.08c 0.51 1.91c 1.14 0.88 0.78 2.05c 1.23
French versus
German 0.68 ⫺0.83 ⫺1.14 ⫺1.03 0.45 1.04 0.57 1.10
French versus
Scandinavian 1.03 0.33 1.23 0.83 0.35 0.82 1.72c 1.33
German versus
Scandinavian 0.82 1.43 2.44b 2.63b ⫺0.08 ⫺0.19 1.19 0.32

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

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 COURTS 501

information, by country, on the estimated duration of dispute

resolution, with countries arranged by legal origin. A striking
finding is the extraordinary length of time it takes, on average, to
pursue either claim in court. The worldwide average time for
accomplishing an eviction is 254 (median of 202) calendar days,
and for collecting a check 234 (median of 197) calendar days. With
all the other costs, this number suggests why individuals in most
countries choose not to use the formal legal system to resolve

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their disputes.
There is tremendous variation in the estimated duration of
each procedure among countries. Eviction is estimated to take 49
days in the United States, 547 in Austria, and 660 in Bulgaria.
Check collection is estimated to take 60 days in New Zealand, 527
in Colombia, and 645 in Italy. The comparison by legal origin for
eviction puts common law and Scandinavian legal origin coun-
tries on top (shortest duration) and socialist and French legal
origin countries at the bottom. Interestingly, and consistent with
earlier work on creditor rights in Germany [La Porta et al. 1997],
German legal origin countries are comparatively more efficient at
check collection than at eviction. But the bottom line of Table V is
the higher expected duration in civil law countries. In the words
of an Indonesian legal scholar, “in connection with the nature of
judicial process itself and considering the formal, punctual, and
rather complicated manners and usages upheld by courts accord-
ing to the Law of Procedure (especially for the laymen), it could be
said that correct judgment cannot be performed in a short time”
[Gandasurbrata 1980, p. 7].
Table VI presents the regression results of the determinants
of judicial quality, including the log of per capita income, average
years of schooling, latitude, ethnic fractionalization, and the for-
malism index (we consider incentives later). Panel A focuses on
eviction, and Panel B on check collection. For both procedures,
expected duration is not related to either the level of per capita
income or the years of schooling in a statistically significant way.
(The two controls—fractionalization and latitude—are also insig-
nificant.) These results are inconsistent with the development
hypothesis.
In contrast, expected duration is highly correlated with pro-
cedural formalism. Countries with higher formalism, not surpris-
ingly, have longer expected times of using the judicial system to
evict a nonpaying tenant or to collect a check. This result has
important implications: it suggests that legal structure, rather
 TABLE VI
OUTCOMES AND THE FORMALISM INDEX (OLS REGRESSIONS)
502
Ordinary least squares regressions of the cross section of countries. Robust standard errors are in parentheses. All variables are
described in Table I, and the data can be found at http://iicg.som.yale.edu/.

Independent variables:

Average
Dependent Log GNP Formalism Ethnic years of N
variables: per capita index fractionalization schooling Latitude Constant [R 2 ]

Panel A: Eviction of a tenant

Log of duration ⫺0.0736 0.3012a ⫺0.2202 0.0305 0.1635 4.5593a 91

(0.0937) (0.0812) (0.4766) (0.0556) (0.5432) (0.7183) [0.15]
Enforceability of 0.7728a ⫺0.5648a 1.7036a 0.0755 0.7046 0.1959 50
contracts (0.1237) (0.0863) (0.4907) (0.0612) (0.5646) (0.9043) [0.85]
Legal system is fair 0.3501a ⫺0.5032a ⫺0.8773c ⫺0.1729a 0.0481 4.0479a 60
and impartial (0.1094) (0.0827) (0.5192) (0.0514) (0.6593) (0.9578) [0.49]
Legal system is 0.5087a ⫺0.4637a ⫺0.9113c ⫺0.1938a 0.2377 2.6552a 60
honest or (0.1050) (0.0703) (0.4679) (0.0491) (0.5956) (0.8661) [0.54]
uncorrupt
Legal system is ⫺0.0344 ⫺0.1374b ⫺0.7111b ⫺0.0953b 0.3681 4.6225a 60
affordable (0.0918) (0.0663) (0.3528) (0.0377) (0.4174) (0.6865) [0.26]
Legal system is 0.3379a ⫺0.2847a ⫺0.6666 ⫺0.1621a 0.3352 2.7261a 60
consistent (0.1060) (0.0774) (0.4376) (0.0466) (0.5306) (0.8494) [0.41]
Confidence in legal 0.3250a ⫺0.1289c ⫺0.4663 ⫺0.0781c ⫺0.7303 2.6542a 60
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system (0.0999) (0.0758) (0.4223) (0.0411) (0.4862) (0.8153) [0.29]

Corruption 1.5238a ⫺0.6393a ⫺0.2640 ⫺0.0998 0.5314 ⫺4.5186a 76
(0.1365) (0.1189) (0.5182) (0.0632) (0.7226) (0.9537) [0.87]
Law and order 0.9416a ⫺0.3594c ⫺0.0867 ⫺0.1632 4.4505a 0.1644 82
(0.2245) (0.2107) (0.7624) (0.1048) (1.2861) (1.9529) [0.57]

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 Panel B: Check collection

Log of duration ⫺0.0377 0.3038a 0.7677 0.0693 0.0866 3.6403a 91

(0.0826) (0.0598) (0.4969) (0.0599) (0.4612) (0.6473) [0.20]
Enforceability of 0.6013a ⫺0.5041a 1.6713a 0.1304b 0.8437 0.8848 50
contracts (0.1310) (0.0684) (0.4586) (0.0618) (0.5685) (0.8835) [0.86]
Legal system is fair 0.2567b ⫺0.4415a ⫺1.0089b ⫺0.1522a 0.0171 4.4417a 60
and impartial (0.1080) (0.0582) (0.4777) (0.0524) (0.5951) (0.8833) [0.52]
Legal system is 0.4258a ⫺0.3950a ⫺1.0105b ⫺0.1756a 0.2284 2.9389a 60
honest or (0.1076) (0.0568) (0.4347) (0.0522) (0.5504) (0.8239) [0.55]
uncorrupt
Legal system is ⫺0.0564 ⫺0.1074b ⫺0.7225b ⫺0.0906b 0.3811 4.6416a 60
affordable (0.0940) (0.0497) (0.3493) (0.0388) (0.4141) (0.6895) [0.25]
Legal system is 0.2814b ⫺0.2637a ⫺0.7670c ⫺0.1493a 0.2951 3.0424a 60
consistent (0.1071) (0.0539) (0.4261) (0.0485) (0.4998) (0.8246) [0.44]
Confidence in legal 0.2943a ⫺0.1393b ⫺0.5487 ⫺0.0707c ⫺0.7808 2.9304a 60
system (0.0996) (0.0530) (0.4193) (0.0411) (0.4766) (0.8039) [0.31]
Corruption 1.4255a ⫺0.4528a ⫺0.2994 ⫺0.0761 0.7321 ⫺4.6737a 76
(0.1494) (0.1077) (0.5308) (0.0707) (0.7556) (1.0804) [0.85]
COURTS

Law and order 0.9261a ⫺0.2647 ⫺0.0359 ⫺0.1615 4.5262a ⫺0.1441 82

(0.2160) (0.1915) (0.7375) (0.1063) (1.2763) (1.7720) [0.57]

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

503

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 TABLE VII
OUTCOMES AND THE FORMALISM INDEX (INSTRUMENTAL VARIABLES REGRESSIONS)
504
Instrumental variables regressions of the cross section of countries using legal origin dummies as instruments for formalism. Standard
errors are in parentheses. All variables are described in Table I.

Independent variables:

Average
Dependent Log GNP Formalism Ethnic years of
variables: per capita index fractionalization schooling Latitude Constant N

Panel A: Eviction of a tenant

Log of duration ⫺0.0766 0.2486c ⫺0.2583 0.0276 0.1544 4.8183a 91

(0.0935) (0.1299) (0.4826) (0.0551) (0.5485) (0.9317)
Enforceability of 0.7854a ⫺0.7656a 1.6159a 0.0605 0.5138 1.0620 50
contracts (0.1243) (0.1586) (0.5441) (0.0625) (0.6369) (1.1726)
Legal system is fair 0.3358a ⫺0.8331a ⫺1.3299b ⫺0.1634a ⫺0.4026 5.7299a 60
and impartial (0.1101) (0.1363) (0.5368) (0.0547) (0.7484) (0.0021)
Legal system is 0.4954a ⫺0.7735a ⫺1.3363a ⫺0.1849a ⫺0.1856 4.2348a 60
honest or (0.1067) (0.1334) (0.4782) (0.0523) (0.6876) (0.9426)
uncorrupt
Legal system is ⫺0.0367 ⫺0.1920 ⫺0.7859b ⫺0.0937b 0.2936 4.9006a 60
affordable (0.0899) (0.1149) (0.3867) (0.0374) (0.4227) (0.8735)
Legal system is 0.3277a ⫺0.5218a ⫺0.9919b ⫺0.1553a 0.0113 3.9350a 60
consistent (0.981) (0.1314) (0.4379) (0.0470) (0.5824) (0.9125)
Confidence in legal 0.3170a ⫺0.3149b ⫺0.7214 ⫺0.0728c ⫺0.9843c 3.6022a 60
QUARTERLY JOURNAL OF ECONOMICS

system (0.0995) (0.1212) (0.4395) (0.0422) (0.5335) (1.0189)

Corruption 1.5277a ⫺0.9139a ⫺0.4378 ⫺0.1108c 0.3227 ⫺3.2976a 76
(0.1356) (0.1565) (0.5586) (0.0648) (0.8019) (1.1151)
Law and order 0.8983a ⫺0.8432b ⫺0.5352 ⫺0.1710 4.0787a 2.7075 82
(0.2321) (0.3192) (0.7586) (0.1080) (1.2767) (2.3042)

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 Panel B: Check collection

Log of duration ⫺0.0365 0.3117a 0.7746 0.0697 0.0881 3.5959a 91

(0.0862) (0.1034) (0.4707) (0.0587) (0.4660) (0.7668)
Enforceability of 0.5637a ⫺0.6438a 1.5940a 0.1339b 0.7335 1.7504 50
contracts (0.1366) (0.1353) (0.4977) (0.0642) (0.6396) (1.1637)
Legal system is fair 0.1905c ⫺0.6955a ⫺1.4818a ⫺0.1319b ⫺0.3962 6.1443a 60
and impartial (0.1100) (0.1076) (0.4962) (0.0571) (0.6871) (0.9813)
Legal system is 0.3610a ⫺0.6436a ⫺1.4733a ⫺0.1558b ⫺0.1761 4.6052a 60
honest or (0.1137) (0.1118) (0.4611) (0.0580) (0.6635) (1.0004)
uncorrupt
Legal system is ⫺0.0718 ⫺0.1664c ⫺0.8323b ⫺0.0859b 0.2851 5.0370a 60
affordable (0.0966) (0.0950) (0.4009) (0.0393) (0.4301) (0.9297)
Legal system is 0.2354b ⫺0.4403a ⫺1.0957b ⫺0.1352b 0.0077 4.2260a 60
consistent (0.1027) (0.1021) (0.4338) (0.0503) (0.5451) (0.9241)
Confidence in legal 0.2616b ⫺0.2644a ⫺0.7816c ⫺0.0607 ⫺0.9843c 3.7688a 60
system (0.1067) (0.0953) (0.4375) (0.0436) (0.5010) (1.0289)
Corruption 1.3683a ⫺0.7426a ⫺0.5811 ⫺0.0775 0.5495 ⫺2.9536b 76
(0.1565) (0.1527) (0.5755) (0.0761) (0.8372) (1.3086)
COURTS

Law and order 0.8290a ⫺0.8054b ⫺0.6128 ⫺0.1701 4.1170a 3.0842 82

(0.2209) (0.3159) (0.8051) (0.1097) (1.3400) (2.4298)

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

505

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506 QUARTERLY JOURNAL OF ECONOMICS

than the level of development, shapes this crucial dimension of

judicial efficiency.
Some examples illustrate the findings of Table VI. Malawi
is a low-income common law country, with per capita income of
$180. It has a formalism index of 3.14 for eviction, and ex-
pected duration of only 35 days. It also has a formalism index
of 2.95 for check collection, and expected duration of 108 days.
By comparison, Mozambique is a low-income French legal ori-

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gin country, with per capital income of $220. It has one of the
highest formalism indices of 5.15 for eviction, and expected
duration of 540 days. For check collection its formalism index
is 4.49, and expected duration is 540 days. The same pattern
emerges if we compare middle income countries (e.g., New
Zealand versus Portugal), as well as rich countries (e.g., United
Kingdom versus Austria).
The results on expected duration raise the crucial ques-
tion: does procedural formalism, at the cost of longer proceed-
ings, secure better justice? The answer suggested by Table VI
is no.
Note first that countries with richer populations generally
have higher quality justice as indicated by nearly all survey
measures, consistent with the development hypothesis. However,
our measure of human capital, the average years of schooling,
often enters with the “wrong” (negative) sign and is statistically
significant. The latter result is not just a consequence of educa-
tion and per capita income being highly correlated; education
comes in negative about half the time even without the inclusion
of per capita income. Latitude is generally unimportant, but
ethnic fractionalization exerts a negative, though usually insig-
nificant, influence on judicial quality. The evidence on the devel-
opment hypothesis is thus mixed: our measure of income, but not
our measure of education, yields results consistent with this
hypothesis.
Nearly all survey measures suggest that higher formalism is
associated with inferior justice, holding other things constant.
This result holds, with minor differences, for both eviction and
check collection. It holds for enforceability of contracts, law and
order, and corruption, but also for World Business Environment
Survey measures. Higher formalism is associated with less fair-
ness and impartiality, less honesty, less consistency, and less
 COURTS 507

confidence in the legal system.8 Table VI contains the basic bot-

tom line of this paper: at least for simple disputes, higher formal-
ism is associated not only with the expected higher duration of
dispute resolution, but also with lower quality justice as per-
ceived by participants.
In Table VII we repeat the analysis of Table VI using legal
origin dummies as instruments for formalism. With no excep-
tions, the results remain statistically significant, and confirm

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that formalism has adverse effects on both the expected duration
of proceedings and other aspects of quality of the legal system.
The exogeneity of legal origin for most countries suggests that it
is unlikely to be the case that countries with a worse law and
order environment choose heavier formalism. The instrumental
variable results suggest the opposite direction of causality: coun-
tries that have inherited legal systems with heavily formalized
dispute resolution end up with lower quality legal systems, at
least for simple disputes.
At the same time the instrumental variable procedure cannot
reject the hypothesis that the adverse effect of French civil law on
the efficiency and quality of dispute resolution works through a
channel other than formalism. For example, suppose that the
transplantation of French legal rules is conducive to general state
interventionism and bureaucratic inefficiency, as argued in La
Porta et al. [1999], and that this channel undermines the perfor-
mance of courts as well. In this case, we cannot be sure that
formalism, as opposed to general interventionism, is the culprit.
To assess this alternative, we repeat the analysis in Tables VI
and VII using in place of formalism a measure of state interven-
tionism having nothing to do with courts per se, namely the
heaviness of regulation of entry by new firms from Djankov et al.
[2002]. The latter paper finds that such regulation is heavier in
French civil law countries than in common law countries. When
we do this analysis, we find that, indeed, the regulation of entry
predicts longer duration of dispute resolution, and lower quality
of adjudication, in both the OLS and instrumental variable re-
gressions. However, the explanatory power of regulation of entry
is only 4 to 5 percent, compared with the explanatory power of
formalism of 18 to 20 percent. Thus, while we cannot reject the

8. The results in Table VI hold with the French and the English legal origins,
and are robust to alternative measures of heterogeneity, such as religious heter-
ogeneity from Alesina et al. [2003].
508 QUARTERLY JOURNAL OF ECONOMICS

TABLE VIII
OUTCOMES AND INCENTIVES (OLS REGRESSIONS)
Ordinary least squares regressions of the cross section of countries. The regres-
sions also include log of GNP per capita, ethnic fractionalization, average years
of schooling, latitude, and a constant term. Robust standard errors are in paren-
theses. All variables are described in Table I, and the data can be found at
http://iicg.som.yale.edu/.

Selected independent variables:

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Index of
Formalism mandatory Quota litis Loser N
Dependent variables: index time limits prohibited pays rule [R 2 ]

Panel A: Eviction of a tenant

Log of duration 0.4303a ⫺0.6335 0.3162c 0.0383 91

(0.1030) (0.3931) (0.1768) (0.1722) [0.21]
Enforceability of ⫺0.5465a ⫺0.4260 ⫺0.0642 0.1393 50
contracts (0.0965) (0.4977) (0.2147) (0.2278) [0.86]
Legal system is fair ⫺0.4019a ⫺0.4282 0.0520 ⫺0.2147 60
and impartial (0.1135) (0.3504) (0.1550) (0.1574) [0.52]
Legal system is ⫺0.3557a ⫺0.5440 ⫺0.0751 ⫺0.2704 60
honest or (0.1024) (0.3527) (0.1650) (0.1694) [0.58]
uncorrupt
Legal system is ⫺0.2077b 0.2588 ⫺0.2991c ⫺0.1124 60
affordable (0.1019) (0.3326) (0.1652) (0.1432) [0.33]
Legal system is ⫺0.1820c ⫺0.4575 ⫺0.0045 ⫺0.2557c 60
consistent (0.0951) (0.2974) (0.1423) (0.1404) [0.47]
Confidence in legal ⫺0.0234 ⫺0.4047 ⫺0.0717 ⫺0.4249a 60
system (0.0882) (0.3114) (0.1365) (0.1386) [0.43]
Corruption ⫺0.5351a ⫺0.4128 0.0527 ⫺0.1617 76
(0.1670) (0.6082) (0.2273) (0.2230) [0.87]
Law and order ⫺0.0543 ⫺1.2233 1.1384a 0.3560 82
(0.2562) (0.7414) (0.3702) (0.3745) [0.64]

Panel B: Check collection

Log of duration 0.3239a ⫺0.1918 0.1040 0.1054 91

(0.0850) (0.3328) (0.1930) (0.1544) [0.20]
Enforceability of ⫺0.4557a ⫺0.2515 ⫺0.0242 ⫺0.0785 50
contracts (0.0967) (0.4798) (0.2259) (0.2032) [0.86]
Legal system is fair ⫺0.2930a ⫺0.8371a 0.0897 ⫺0.3587b 60
and impartial (0.0735) (0.2968) (0.1440) (0.1490) [0.61]
Legal system is ⫺0.2870a ⫺0.5676 ⫺0.0619 ⫺0.4496a 60
honest or (0.0799) (0.3458) (0.1654) (0.1666) [0.62]
uncorrupt
Legal system is ⫺0.1394c 0.1677 ⫺0.2870c ⫺0.1541 60
affordable (0.0755) (0.3198) (0.1649) (0.1392) [0.31]
 COURTS 509

TABLE VIII
(CONTINUED)

Legal system is ⫺0.1683b ⫺0.5283c ⫺0.0081 ⫺0.3085b 60

consistent (0.0714) (0.2909) (0.1535) (0.1384) [0.51]
Confidence in legal ⫺0.0866 ⫺0.1780 ⫺0.1018 ⫺0.4514a 60
system (0.0710) (0.3231) (0.1502) (0.1277) [0.43]
Corruption ⫺0.2762b ⫺0.6330 0.1550 ⫺0.5330b 76
(0.1243) (0.4452) (0.2436) (0.2175) [0.86]
Law and order 0.1890 ⫺2.3986a 1.3469a 0.1304 82

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(0.2369) (0.7659) (0.3783) (0.3639) [0.67]

a ⫽ significant at 1 percent level; b ⫽ significant at 5 percent level; c ⫽ significant at 10 percent level.

hypothesis that the channel of influence of legal origin on the

quality of dispute resolution is general interventionism, the
channel we have identified in this paper, namely procedural
formalism, explains much more than a generic measure of
interventionism.
Finally, we consider the hypothesis that the quality of adju-
dication is shaped by the incentives facing the participants [Mes-
sick 1999; Buscaglia and Dakolias 1999]. In Table VIII we present
the results for three frequently mentioned measures of incen-
tives: mandatory time limits for judges, loser pays rules, and
prohibition of contingency fees for attorneys. Mandatory dead-
lines are sometimes seen as effective mechanisms for speeding up
proceedings; loser pays rules may make justice quicker and fairer
because they discourage delays by defendants who are at fault;
while prohibitions of contingency fees may dis-incentivize law-
yers and thus delay proceedings. There is no convincing evidence,
however, that these measures of incentives systematically influ-
ence either the duration of proceedings, or the subjective mea-
sures of the quality of the legal system. Moreover, despite the
inclusion of the three new variables, the formalism index retains
its effect and statistical significance in nearly all specifications.
This analysis concludes our presentation of the evidence on
the three theories of what determines court performance. The
results on the incentive theory are negative, but must be inter-
preted with caution, since we might not have the most appropri-
ate measures of incentives facing the participants in a dispute.
The results on the development theory are mixed: countries with
richer populations have better (in some respects) courts, though
this is not true for countries with more educated populations.
510 QUARTERLY JOURNAL OF ECONOMICS

Finally, consistent with our analysis of regulation of dispute

resolution, countries with heavier procedural formalism have
both more slow and lower quality systems of dispute resolution,
at least when one focuses on simple disputes.

VI. CONCLUSION
We present an analysis of legal procedures triggered by re-

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solving two specific disputes—the eviction of a nonpaying tenant
and the collection of a bounced check—in 109 countries. The data
come from detailed descriptions of these procedures by Lex Mundi
member law firms. For each country the analysis leads to an
index of formalism—a measure of the extent to which its legal
procedure differs from the hypothetical benchmark of a neighbor
informally resolving a dispute between two other neighbors. We
then ask whether formalism varies systematically across coun-
tries, and whether it shapes the quality of the legal system.
Consistent with the literature on comparative law, we find
that judicial formalism is systematically greater in civil law coun-
tries, and especially French civil law countries, than in common
law countries. Formalism is also lower in the richest countries.
The expected duration of dispute resolution is often extraordinar-
ily high, suggesting significant inefficiencies. The expected dura-
tion is higher in countries with more formalized proceedings, but
is independent of the level of development. Perhaps more surpris-
ingly, formalism is nearly universally associated with lower sur-
vey measures of the quality of the legal system. These measures
of quality are also higher in countries with richer populations. We
find no evidence that incentives facing the participants in litiga-
tion influence the performance of courts.
There are two broad views of this evidence. According to the
first, greater formalism is efficient in some countries: it can re-
duce error, advance benign political goals, or protect the judicial
process from subversion by powerful interests. On this view, the
various regulatory steps, such as reliance on professional judges
and collection of written evidence, are there to secure a fair
judicial process. Put differently, while heavily formalized adjudi-
cation appears problematic on some measures, it would be even
more problematic without the regulation.
According to the second view, many developing countries
accepted the formalism in adjudication they now have as part of
the transplantation of their legal system from their colonizers. On
 COURTS 511

this view, there is no presumption that the transplanted system

is efficient. Although heavy procedural formalism has theoreti-
cally plausible reasons for its existence, the reality it brings is
extreme costs and delays, unwillingness by potential participants
to use courts, and ultimately injustice. At least some of the
burdens of formalism may therefore be unnecessary, and could be
relieved through reform, especially for simple disputes.
The evidence in this paper supports the second theory. Spe-

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cifically, the evidence points to extremely long expected duration
of dispute resolution, suggesting that courts are not an attractive
venue for resolving disputes. Furthermore, we find no offsetting
benefits of formalism, even when looking at a variety of measures
of the perception of fairness and justice by the users of the legal
system. Moreover, legal origin itself appears to determine judicial
quality, other things equal, suggesting that formalism is unlikely
to be part of an efficient design.
The evidence suggests that the systems of dispute resolution
in many countries may be inefficient—at least as far as simple
disputes are concerned. In particular, one cannot presume in
economic analysis, especially as applied to developing countries,
that property and contract are secured by courts. This conclusion
has two implications. First, it may explain why alternative strat-
egies of securing property and contract, including private dispute
resolution, are so widespread in developing countries. Second, our
results suggest a practical strategy of judicial reform, at least
with respect to simple disputes, namely the reduction of proce-
dural formalism.
 APPENDIX 1: MAPPING BETWEEN THE “INTERNATIONAL ENCYCLOPAEDIA OF LAWS—CIVIL PROCEDURE,”
512
AND THE VARIABLES AND INDICES IN THE PAPER
This appendix compares the coverage of all the variables and indices in the paper with the table of contents of the Encyclopaedia of
Laws—Civil Procedure (French monograph). The first column shows the different parts of the International Encyclopaedia of Laws—Civil
Procedure.” The second column gives the names of the variables in the paper that are related to the chapter in the encyclopedia. The last
column indicates whether the variables in the second column belong to the Formalism Index (FI); to other determinants of judicial efficiency
(Other), which are not reported in this version but are available from the authors; or to variables that are outcomes in the paper (Outcomes).

International Encyclopaedia of Laws—

Civil Procedure (France) Variables in the paper Indices in the paper

Part I. Judicial organization

1. The courts and their members Variable: Professional versus nonprofessional judge FI: Professionals versus laymen
2. The bar Variable: Legal representation is mandatory FI: Professionals versus laymen
3. Law officials Variable: Service of process by judicial officer FI: Engagement formalities
required
Variable: Notification of judgment by judicial officer FI: Engagement formalities
required
Part II: Jurisdiction
1. Domestic jurisdiction Variable: General jurisdiction court FI: Professionals versus laymen
2. International jurisdiction Not covered: Lex Mundi Project analyzed simple local
disputes only
Part III: Actions and claims
QUARTERLY JOURNAL OF ECONOMICS

1. Actions Not covered: Right to sue assumed by case facts

Collective actions outside of scope of Lex Mundi
Project, which analyzed simple local disputes only
2. Claims and defenses Variables: Filing and opposition FI: Written versus oral elements
Variable: Complaint must be legally justified FI: Legal justification
3. Sanctions and procedural Variables: Mandatory time limits Other: Mandatory time limits
irregularities

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Part IV: Proceedings
1. Pretrial proceedings: Conciliation Variable: Mandatory pretrial conciliation FI: Engagement formalities
before trial
2. Proceedings in first instance Variables: Filing, service, opposition, final arguments, FI: Written versus oral elements
judgment, notification of judgment
Variable: Complaint must be legally justified FI: Legal justification
Variable: Judgment must be legally justified FI: Legal justification
Variable: Judgment must be on law (not on equity) FI: Legal justification
Variable: Independent procedural actions for filing FI: Independent procedural actions
and service
Variable: Independence procedural actions for trial FI: Independent procedural actions
and judgment
Variable: Duration of filing and service Outcomes: Duration in practice
Variable: Duration of trial and judgment Outcomes: Duration in practice
Variable: Service of process by judicial officer FI: Engagement formalities
required
COURTS

Variable: Notification of judgment by judicial officer FI: Engagement formalities

required
Variable: Defendant’s economic situation is Other: Defendant protection
considered at judgment
3. Review proceedings (appeal) Variable: Enforcement of judgment is automatically FI: Control of superior review
suspended until resolution of the appeal
Variable: Comprehensive review in appeal FI: Control of superior review
Variable: Interlocutory appeals are allowed FI: Control of superior review
Part V: Incidents Mostly not covered: Outside standardized facts
included in questionnaire
Variable: Interlocutory appeals are allowed FI: Control of superior review
513

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 APPENDIX 1
514
(CONTINUED)

International Encyclopaedia of Laws—

Civil Procedure (France) Variables in the paper Indices in the paper

Part VI: Legal costs and legal aid

1. Legal costs Variable: Legal representation is mandatory FI: Professionals versus laymen
Variable: Attorney fees are fixed or limited by Other: Attorney’s incentives
statute, court, or administrative regulation
Variable: Most common remuneration of litigation Other: Attorney remuneration
attorneys
Variable: Quota litis or contingent fee agreements Other: Quota litis
Variable: Loser pays rule Other: Other determinants
Variable: Fully compensatory interests Other: Other determinants
2. Legal aid Variable: Mandatory legal aid available by law or by Other: Defendant protection
order of the court
Part VII: Evidence
1. Burden of proof Variable: Authenticity and weight of evidence defined FI: Statutory regulation of evidence
by law
Variable: Judge has the independent legal obligation Other: Defendant protection
to investigate facts
2. Admissibility of evidence Variable: Judge cannot introduce evidence FI: Statutory regulation of evidence
Variable: Judge cannot reject irrelevant evidence FI: Statutory regulation of evidence
QUARTERLY JOURNAL OF ECONOMICS

Variable: Out-of-court statements are inadmissible FI: Statutory regulation of evidence

Variable: Only original documents and certified copies FI: Statutory regulation of evidence
are admissible
Variable: Mandatory prequalification of questions FI: Statutory regulation of evidence
3. Administration of evidence Variable: Mandatory recording of evidence FI: Statutory regulation of evidence
Variable: Oral interrogation only by judge FI: Statutory regulation of evidence
Variable: Evidence FI: Written versus oral elements

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Part VIII: Particular proceedings Not covered: Lex Mundi Project covered only eviction
and check collection proceedings
Part IX: Enforcement of judgments
and preliminary seizure for
security
1. Enforcement of domestic Variable: Independent procedural actions for FI: Independent procedural actions
judgments enforcement of judgment
Variable: Duration of enforcement of judgment Outcomes: Duration in practice
Variable: Enforcement of judgment FI: Written versus oral elements
Variable: Defendant’s economic situation is Other: Defendant protection
considered at enforcement of judgment
Variable: Enforcement of judgment is automatically FI: Control of superior review
suspended until resolution of the appeal
Variable: Transfer of debtor’s property only through Other: Defendant protection
public auction
Variable: Mandatory exclusion of defendant’s Other: Defendant protection
COURTS

essential survival assets

2. Protective measures Variable: Attachment of debtor’s property only after Other: Defendant protection
judgment
3. Recognition and enforcement of Not covered: Lex Mundi Project analyzed simple local
foreign judgments disputes only
Part X: Arbitration Not covered: Lex Mundi Project focused on judicial
procedures
Variable: Administrative procedures Other: Other determinants
515

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516 QUARTERLY JOURNAL OF ECONOMICS

WORLD BANK
HARVARD UNIVERSITY
YALE UNIVERSITY
HARVARD UNIVERSITY

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