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| Online Judicial Auction and Credit Resources Supply |
| PAN Yue, JI Xiangge, YANG Lingling, NING Bo
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School of Economics, Xiamen University;
Xiamen National Accounting Institute;
School of Management, Xiamen University |
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Abstract China is actively exploring new paths, fields, and models for the deep integration of “digital technology and justice”, which is an important measure in building a rule-of-law business environment in the new era, significantly accelerating social justice. Since the 18th National Congress of the Communist Party of China, the rapid development of emerging digital technologies has provided an excellent opportunity for China's judicial digitalization reform. Judicial auction, an important method for disposing involved properties in legal cases, is crucial in protecting the rights of all parties involved and relates to the goal of “thoroughly resolving the ‘last kilometer’ of difficulties in execution”. It serves economic functions such as resolving breach of contract debts and maintaining financial system stability. Promoting online judicial auctions nationwide is one of the most significant reforms of “digital technology and justice”. However, both academic and practical circles lack necessary attention and discussion on the economic role of online judicial auction.
Online judicial auction is a legal execution process where courts at all levels dispose of properties through internet auction platforms and online electronic bidding. Compared to traditional consignment auction, online judicial auction has obvious advantages: it simplify procedures, break geographical boundaries, significantly expand buyer reach, thus enhancing judicial execution efficiency and rapid asset realization. Additionally, introducing third-party online platforms ensures transparency, promoting fairness in judicial execution. Broad market participation maximizes transaction prices through competitive bidding, safeguarding “creditors' rights”. In China, cases involving judicial auctions often relate to credit-debt disputes. With the promotion of online judicial auctions, banks, as representatives of creditors, become primary beneficiaries. It's generally believed that increased value and faster debt recovery positively affects banks' lending. Online judicial auction effectively improves the efficiency and fairness of judicial execution compared to traditional judicial auctions, promotes the better recovery of bank debt, and then stimulates the willingness of banks to provide credit resource.
To verify the aforesaid hypothesis, this paper uses samples from urban and rural commercial banks from 2007 to 2020, based on the phased implementation of online judicial auction by courts nationwide. It examines the reform's impact on local bank credit supply. Results show that online judicial auction significantly enhances the credit supply of local commercial banks. The mechanism works by protecting bank rights through improved judicial execution efficiency and fairness, thereby increasing their willingness to supply credit. The effect is more pronounced when the local area has a higher proportion of real estate auctions, poor traditional auction conditions, and greater market demand for judicial auctions. Furthermore, the increased credit supply from online judicial auction significantly alleviates financing constraints for SMEs, especially private enterprises, indicating that digital justice reforms benefit financial services for the real economy.
This paper contributes in the following ways: firstly, it deepens the research content of the digital economy. The digital economy is an important driving force in China's modernization process, but existing literature mainly focuses on corporate digital transformation, with insufficient attention to judicial digitalization reforms. This paper is the first empirical study on the substantial impact of the integration of “digital technology and judiciary execution”. Secondly, it enriches economic literature related to China's judicial reforms, an important practice in building a rule-of-law business environment and vital for a healthy financial system. The paper explores the impact of implementing online judicial auction on financial services for the real economy, providing a comprehensive insight into the economic significance of judicial auction reforms and filling the gap in related economic studies. Lastly, it expands academic understanding of factors influencing credit resource supply. Credit resource supply has always been a focus for policymakers and scholars. Literature from a rule-of-law perspective primarily uses cross-country data or explores from the overall rule of law environment, with few studies from a judicial perspective focusing on litigation. This paper shows that judicial auction reforms alleviate difficulties in China's judicial system and optimize credit resource supply, offering significant policy reference for constructing a “rule-of-law system, financial system and real economy” coordinated development pattern, thereby advancing China's modernization.
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Received: 04 July 2023
Published: 16 July 2024
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