Law, Politics, and Finance
The authors assess three established theories about the historical determinants of financial development. They also propose an augmented version of one of these theories. The law and finance view, stresses that different legal traditions emphasize,...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/04/1089588/law-politics-finance http://hdl.handle.net/10986/19682 |
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okr-10986-196822021-04-23T14:03:43Z Law, Politics, and Finance Beck, Thorsten Demirguc-Kunt, Asli Levine, Ross ACTIONS ACTS ADMINISTRATIVE COURTS AUTHORITY BANKRUPTCY BANKRUPTCY LAW BUREAUCRACY CANON LAW CENTRAL GOVERNMENT CENTRALIZATION CIVIL CODES CIVIL LAW CIVIL LAW SYSTEMS CIVIL PROCEDURE CIVIL SERVICE CODES COLONIES COLONIZATION COMMERCIAL LAW COMMON LAW COMPARATIVE LAW CORRUPTION COURT SYSTEM DECISION-MAKING DECISION-MAKING PROCESS DISCLOSURE ECONOMIC DEVELOPMENT ELECTED REPRESENTATIVES FINAL JUDGMENT FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS FOREIGN LAW INDIVIDUAL RIGHTS INSTITUTIONAL DEVELOPMENT JUDGES JUDICIAL DECISIONS JUDICIAL INDEPENDENCE JUDICIAL REVIEW JUDICIAL SYSTEM JUDICIARY JUSTICE KINGS LAWS LAWYERS LEGAL CODES LEGAL CULTURE LEGAL INSTITUTIONS LEGAL REGULATION LEGAL SYSTEM LEGAL SYSTEMS LEGISLATION LEGISLATIVE ACTIONS LEGISLATIVE SUPREMACY LEGISLATURE MONARCHY NATIONALISM POLITICAL INSTITUTIONS POLITICAL POWER PRIVATE LAW PROPERTY RIGHTS PUBLIC OWNERSHIP REVOLUTION REVOLUTIONS ROLE OF LAW ROMAN LAW SLAVERY STATE POWER The authors assess three established theories about the historical determinants of financial development. They also propose an augmented version of one of these theories. The law and finance view, stresses that different legal traditions emphasize, to differing degrees, the rights of individual investors relative to the state, which has important ramifications for financial development. The dynamic law and finance vie, augments the law and finance view, stressing that legal traditions also differ in their ability to adapt to changing conditions. The politics and finance view, rejects the central role of legal tradition, stressing instead that political factors shape financial development. The endowment view, argues that the mortality rates of European settlers, as they colonized various parts of the globe, influenced the institutions they initially created, which has had enduring effects on institutions today. When initial conditions produced an unfavorable environment for European settlers, colonialists tended to create institutions designed to extract resources expeditiously, not to foster long-run prosperity. The authors' empirical results are most consistent with theories that stress the role of legal tradition. The results provide qualified support for the endowment view. The data are least consistent with theories that focus on specific characteristics of the political structure, although politics can obviously affect the financial sector. In other words, legal origin - whether a country has a British, French, German, or Scandinavian legal heritage - helps explain the development of the country's financial institutions today, even after other factors are controlled for. Countries with a French legal tradition, tend to have weaker financial institutions, while those with common law, and German civil laws, tend to have stronger financial institutions. 2014-08-26T15:46:45Z 2014-08-26T15:46:45Z 2001-04 http://documents.worldbank.org/curated/en/2001/04/1089588/law-politics-finance http://hdl.handle.net/10986/19682 English en_US Policy Research Working Paper;No. 2585 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACTIONS ACTS ADMINISTRATIVE COURTS AUTHORITY BANKRUPTCY BANKRUPTCY LAW BUREAUCRACY CANON LAW CENTRAL GOVERNMENT CENTRALIZATION CIVIL CODES CIVIL LAW CIVIL LAW SYSTEMS CIVIL PROCEDURE CIVIL SERVICE CODES COLONIES COLONIZATION COMMERCIAL LAW COMMON LAW COMPARATIVE LAW CORRUPTION COURT SYSTEM DECISION-MAKING DECISION-MAKING PROCESS DISCLOSURE ECONOMIC DEVELOPMENT ELECTED REPRESENTATIVES FINAL JUDGMENT FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS FOREIGN LAW INDIVIDUAL RIGHTS INSTITUTIONAL DEVELOPMENT JUDGES JUDICIAL DECISIONS JUDICIAL INDEPENDENCE JUDICIAL REVIEW JUDICIAL SYSTEM JUDICIARY JUSTICE KINGS LAWS LAWYERS LEGAL CODES LEGAL CULTURE LEGAL INSTITUTIONS LEGAL REGULATION LEGAL SYSTEM LEGAL SYSTEMS LEGISLATION LEGISLATIVE ACTIONS LEGISLATIVE SUPREMACY LEGISLATURE MONARCHY NATIONALISM POLITICAL INSTITUTIONS POLITICAL POWER PRIVATE LAW PROPERTY RIGHTS PUBLIC OWNERSHIP REVOLUTION REVOLUTIONS ROLE OF LAW ROMAN LAW SLAVERY STATE POWER |
| spellingShingle |
ACTIONS ACTS ADMINISTRATIVE COURTS AUTHORITY BANKRUPTCY BANKRUPTCY LAW BUREAUCRACY CANON LAW CENTRAL GOVERNMENT CENTRALIZATION CIVIL CODES CIVIL LAW CIVIL LAW SYSTEMS CIVIL PROCEDURE CIVIL SERVICE CODES COLONIES COLONIZATION COMMERCIAL LAW COMMON LAW COMPARATIVE LAW CORRUPTION COURT SYSTEM DECISION-MAKING DECISION-MAKING PROCESS DISCLOSURE ECONOMIC DEVELOPMENT ELECTED REPRESENTATIVES FINAL JUDGMENT FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS FOREIGN LAW INDIVIDUAL RIGHTS INSTITUTIONAL DEVELOPMENT JUDGES JUDICIAL DECISIONS JUDICIAL INDEPENDENCE JUDICIAL REVIEW JUDICIAL SYSTEM JUDICIARY JUSTICE KINGS LAWS LAWYERS LEGAL CODES LEGAL CULTURE LEGAL INSTITUTIONS LEGAL REGULATION LEGAL SYSTEM LEGAL SYSTEMS LEGISLATION LEGISLATIVE ACTIONS LEGISLATIVE SUPREMACY LEGISLATURE MONARCHY NATIONALISM POLITICAL INSTITUTIONS POLITICAL POWER PRIVATE LAW PROPERTY RIGHTS PUBLIC OWNERSHIP REVOLUTION REVOLUTIONS ROLE OF LAW ROMAN LAW SLAVERY STATE POWER Beck, Thorsten Demirguc-Kunt, Asli Levine, Ross Law, Politics, and Finance |
| relation |
Policy Research Working Paper;No. 2585 |
| description |
The authors assess three established
theories about the historical determinants of financial
development. They also propose an augmented version of one
of these theories. The law and finance view, stresses that
different legal traditions emphasize, to differing degrees,
the rights of individual investors relative to the state,
which has important ramifications for financial development.
The dynamic law and finance vie, augments the law and
finance view, stressing that legal traditions also differ in
their ability to adapt to changing conditions. The politics
and finance view, rejects the central role of legal
tradition, stressing instead that political factors shape
financial development. The endowment view, argues that the
mortality rates of European settlers, as they colonized
various parts of the globe, influenced the institutions they
initially created, which has had enduring effects on
institutions today. When initial conditions produced an
unfavorable environment for European settlers, colonialists
tended to create institutions designed to extract resources
expeditiously, not to foster long-run prosperity. The
authors' empirical results are most consistent with
theories that stress the role of legal tradition. The
results provide qualified support for the endowment view.
The data are least consistent with theories that focus on
specific characteristics of the political structure,
although politics can obviously affect the financial sector.
In other words, legal origin - whether a country has a
British, French, German, or Scandinavian legal heritage -
helps explain the development of the country's
financial institutions today, even after other factors are
controlled for. Countries with a French legal tradition,
tend to have weaker financial institutions, while those with
common law, and German civil laws, tend to have stronger
financial institutions. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Beck, Thorsten Demirguc-Kunt, Asli Levine, Ross |
| author_facet |
Beck, Thorsten Demirguc-Kunt, Asli Levine, Ross |
| author_sort |
Beck, Thorsten |
| title |
Law, Politics, and Finance |
| title_short |
Law, Politics, and Finance |
| title_full |
Law, Politics, and Finance |
| title_fullStr |
Law, Politics, and Finance |
| title_full_unstemmed |
Law, Politics, and Finance |
| title_sort |
law, politics, and finance |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/04/1089588/law-politics-finance http://hdl.handle.net/10986/19682 |
| _version_ |
1764440313011634176 |