J. Mark Ramseyer, Social Capital and the Formal Legal System: Evidence from Prefecture-Level Data in Japan, 7 J. Legal Analysis 421 (2015).
Abstract: Verifiable proxies for social capital potentially provide an empirically tractable way to identify environments where social norms both constrain behavior and substitute for judicial enforcement. Using regression and factor analysis with Japanese prefecture-level data, I explore several aspects of this possibility. I first note that people in prefectures with high levels of social capital more readily comply with a wide range of low-level legal mandates. Conditional on levels of economic welfare, I further find that: (i) firms in prefectures with low levels of social capital are more likely to default on their contracts, (ii) residents in low social-capital prefectures are more likely to litigate, (iii) creditors of distressed debtors in low social-capital prefectures are more likely to petition a court for enforcement orders, and (iv) distressed debtors in low social-capital prefectures are more likely to file in court for bankruptcy protection.