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This article examines the effect of campaign-style anticorruption efforts on political support using the case of China's most recent anticorruption drive, which stands out for its harsh crackdown on high-ranking offcials, known as \"big tigers.\" An exploratory text analysis of more than 370,000 online comments on the downfall of the first 100 big tigers, from 2012 to 2015, reveals that public support for the top national leader who initiated the anticorruption campaign significantly exceeded that afforded to anticorruption agencies and institutions. Further regression analyses show that support for the leaders with respect to intuitions increased with the tigers' party ranking. Findings suggest that while campaign-style enforcement can reinforce the central authority and magnify support for individual leaders, it may aho marginalize the role of legal institutions crucial to long-term corruption control.

Many authoritarian regimes lack an independent judiciary. This article studies the effect of firms’ political connectedness on court outcomes using a unique hand-collected data set of 3,323 commercial lawsuits involving listed companies in China. We find robust evidence that Chinese courts favor state firms and private firms with personal political ties. The positive effect of political connectedness is pronounced in the outcomes of litigation but not arbitration and is less pronounced in regions with better legal institutions. We also find that locally connected firms are favored in their home courts but not when the case is tried outside their home province. There is some evidence that China’s 2007 Property Law reduces the advantage of state firms. Our results cast light on the welfare redistribution role of courts in emerging and transitional economies.

Legal reforms that improve the security of private property rights to land have characteristics of a public good with dispersed benefits. However, nothing ensures that the state will provide property protection as a public good. Some states provide property protection selectively to powerful groups. Others are unable to provide property protection. In this paper, we argue that whether the state provides property protection as a public good, selectively, or cannot establish private property rights depends on the following features of politics: political stability, government capacity to administer and enforce private property rights, constraints on political decision-makers, and the inclusivity of political and legal institutions. We illustrate the theory using evidence from reforms that increased opportunities to privately own land in the US from the late eighteenth through nineteenth centuries, selective enforcement of land property rights in China, and the absence of credible legal rights to land in Afghanistan.

We examine the causal effect of legal institutional quality on informal norms of cooperation and study the interaction of institutions and culture in sustaining economic exchange. A total of 346 subjects in Italy and Kosovo played a market game under different and randomly allocated institutional treatments, which generated different incentives to behave honestly, preceded and followed by a noncontractible and nonenforceable trust game. Significant increases in individual trust and trustworthiness followed exposure to better institutions. A 1-percentage-point reduction in the probability of facing a dishonest partner in the market game, which is induced by the quality of legal institutions, increases trust by 7–11 percent and trustworthiness by 13–19 percent. This suggests that moral norms of cooperative behavior can follow improvements in formal institutional quality. Cultural origin, initial trust, and trustworthiness influence opportunistic behavior in markets, but only in the absence of strong formal institutions.

Studies of property rights overwhelmingly focus on whether states expropriate or protect property, overlooking the crucial issue of whether private sector actors will use state institutions. By contrast, I argue that the “supply” of formal legal institutions often fails to ensure firms will rely on the state for property rights protection. Instead, firms frequently avoid formal legal institutions and turn to illegal strategies based on violence or corruption. Whether firms adopt legal strategies depends on: (1) firm-level practices and beliefs that impede the use of law, (2) the effectiveness of illegal strategies, and (3) coordination problems resulting from firms’ expectations about each other’s strategies. Drawing on interviews with firms, lawyers, and private security agencies, as well as an original survey of Russian enterprises, I illustrate how “demand-side” factors led to a surprising increase in Russian firms’ reliance on formal legal institutions over the past two decades. The findings suggest that comprehensive understanding of property rights and the rule of law requires not only attention to state institutions’ effectiveness, but also to private actors’ strategies.

This article argues that specific characteristics of the domestic legal institutions of Islamic law states shape these states' choices of peaceful resolution methods in territorial disputes. After providing original data on the characteristics of Islamic legal structures, I systematically compare pertinent rules of international dispute resolution methods and Islamic law. I demonstrate empirically that not all Islamic law states view international settlement venues in the same way. Secular legal features, such as constitutional mentions of education, supreme court, or peaceful settlement of disputes have the power to attract these states to the most formal international venues—arbitration and adjudication. On the other hand, Islamic law states whose legal system is infused with Islamic religious precepts are attracted to less-formalized venues.

Recently, several Muslim countries have ratified new constitutions. In this paper, we ask two questions: first, whether Muslim influence has a discernible impact on the content of such constitutions and, second, whether it has an impact on constitutional reality. More precisely, we are interested in the consequences of Islam for institutions securing the rule of law, while taking competing socioeconomic, geographic, and historical explanations explicitly into account. To this end, we construct a new Islamic State Index to measure the influence that Islam has on a society and its political and legal system. We find that Muslim influence is in conflict with the independence of the judiciary and nondiscriminatory legal institutions with respect to gender. Yet, parliamentary power as well as the protection of property rights and religious minorities are not significantly more constrained in Islamic states after we control for alternative explanations. Competing explanations such as the size of oil rents fare rather poorly in explaining differences in important aspects of the rule of law.

Rapid development of the domestic private sector in communist China and Vietnam has been offered as evidence against a large literature that claims a solid legal infrastructure is required for the financial sector to contribute to economic development. One component of the counterargument holds that relationship-based lending has served as an effective substitute for legal institutions. In this article, we challenge this assertion with empirical findings that show bank credit allocation that relies heavily on “connections” undermines the impact of finance on investment growth. Our data come from Vietnam, where—like China—the private sector and financial sector are expanding dramatically but rule of law has not kept pace. Although Vietnam's banking sector is in transition toward a healthier system, it still allocates a disproportionate share of credit to “connected” enterprises in less competitive regions. We find that political connections, in particular, are an ineffective tool for channeling bank credit to the most profitable investors. Using a two-stage empirical approach, we find evidence that banks place greater value on connections than performance and that the firms with greater access to bank loans are no more profitable than firms without them. By some measures, connected firms are even significantly less profitable. We conclude by demonstrating that the most profitable investors in Vietnam have forgone the formal banking system, preferring to finance their activities out of reinvested earnings or informal loans (JEL G21, G28, G30, O12, K11).

Purpose This study aims to analyze three major defaults on Sukuk since 2007. These case studies make clear that, in most cases, the problems can be traced back to clauses and structures that made the Sukuk more like conventional bonds. The case studies highlighted the importance of the legal institutions of the country where ownership rights are likely to be contested. Strict adherence to Shariah (Islamic Jurisprudence) principles would have considerably simplified restructuring because Shariah compliance implies a clear allocation of property rights: in Sukuk, investors will receive full title to the underlying Sukuk assets in distress situations. Design/methodology/approach The study follows a qualitative research method base on detailed case studies of the Sukuk defaults occurred in the aftermath of financial crises 2007. The focus in this paper is on the resolution process following default, not on the reasons why the default was triggered to begin with. The authors analyze the Sukuk defaults from an Islamic finance perspective. Specifically, after providing basic information on each Sukuk (issuer, arranger, SPV, term period, rate of return, etc.), the authors present an exposition of the underlying contracts of each Sukuk, their structure, reasons for defaults and restructuring process thereafter. Finally, the authors provide a discussion on the critical issues related to Sukuk structures, namely, ownership of underlying Sukuk assets, rights of the investors including recourse, if any, to core assets in case of distress, risk factors including legal and Shariah risks regarding Sukuk structures, purchase undertakings and credit enhancements. Findings The case studies highlighted the importance of the legal institutions of the country where ownership rights are likely to be contested. Interestingly enough, strict adherence to Shariah (Islamic Jurisprudence) principles would have considerably simplified restructuring because Shariah compliance implies a clear allocation of property rights: in Sukuk, investors will receive full title to the underlying Sukuk assets in distress situations. So, the answer to the question the authors asked, is Islamic Finance failing to deliver on its promises, is a qualified no. Originality/value The paper provides in depth analysis of the Sukuk defaults and provide the main reasons for that along with recommendations that compliance to Shariah principles of ownership and risk sharing would reduce incidence of defaults and facilitates restructuring.

We examine the impact of the 1993 Land Law of Vietnam, which gave households the power to exchange, transfer, lease, inherit, and mortgage their land-use rights. We use household surveys before and after the law was passed, together with the considerable variation across provinces in the speed of implementation of the reform, to identify the impact of the law. We find that the additional land rights led to statistically significant increases in the share of total area devoted to long-term crops and in labor devoted to nonfarm activities. However, these changes are not large in magnitude and appear to be driven mainly by the increased security of tenure provided by the law rather than by increased access to credit markets or greater land market participation.