Abstract

http://ssrn.com/abstract=236100
 
 

References (91)



 
 

Citations (487)



 


 



The Great Reversals: The Politics of Financial Development in the 20th Century


Raghuram G. Rajan


University of Chicago - Booth School of Business; International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Luigi Zingales


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); University of Chicago - Polsky Center for Entrepreneurship; European Corporate Governance Institute (ECGI)

June 2001

3rd Annual Fin. Mkt. Dev. Conference, Hong Kong 2001; AFA 2001 New Orleans Meetings; CRSP Working Paper No. 526

Abstract:     
Indicators of the development of the financial sector do not improve monotonically over time. In particular, we find that by most measures, countries were more financially developed in 1913 than in 1980 and only recently have they surpassed their 1913 levels. This pattern cannot be explained by structural theories that attribute cross-country differences in financial development to time-invariant factors, such as a country's legal origin or culture. We propose an "interest group" theory of financial development where incumbents oppose financial development because it breeds competition. The theory predicts that incumbents' opposition will be weaker when an economy allows both cross-border trade and capital flows. This theory can go some way in accounting for the cross-country differences and the time series variation of financial development. When we recognize that different kinds of institutional heritages afford different scope for private interests to express themselves, we obtain a synthesis between the structural theories and private interest theory, which is supported by the data.

Number of Pages in PDF File: 71

Keywords: Corporate Governance, Economic Growth

JEL Classification: G34, O16

working papers series





Download This Paper

Date posted: July 22, 2000  

Suggested Citation

Rajan, Raghuram G. and Zingales, Luigi, The Great Reversals: The Politics of Financial Development in the 20th Century (June 2001). 3rd Annual Fin. Mkt. Dev. Conference, Hong Kong 2001; AFA 2001 New Orleans Meetings; CRSP Working Paper No. 526. Available at SSRN: http://ssrn.com/abstract=236100 or http://dx.doi.org/10.2139/ssrn.236100

Contact Information

Raghuram G. Rajan (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4437 (Phone)
773-702-0458 (Fax)
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
773-702-9299 (Phone)
773-702-0458 (Fax)
Luigi Zingales
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

Chicago Booth School of Business Logo

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
University of Chicago - Polsky Center for Entrepreneurship
Chicago, IL 60637
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Feedback to SSRN


Paper statistics
Abstract Views: 6,421
Downloads: 1,555
Download Rank: 4,808
References:  91
Citations:  487
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.297 seconds