Law, Finance and Development Further Analyses of Longitudinal Data

Cambridge Journal of Economics, March, 2010

Posted: 7 Oct 2009 Last revised: 30 Jun 2011

See all articles by Prabirjit Sarkar

Prabirjit Sarkar

University of Cambridge

Ajit Singh

United Nations; University of Cambridge

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2009


This paper analyses a longitudinal dataset on legal protection of shareholders over a 36 year period, 970-2005 for four advanced countries, UK, France, Germany and the US. It examines two aspects of the legal origin hypothesis - whether shareholder protection is higher in the common law countries (UK and USA) than in the civil law countries (France and Germany) and whether shareholder protection matters for stock market development in the short and long runs. It also examines the “causation” issue and the “endogeneity” problem- whether greater shareholder protection leads to stock market development or whether stock market development leads to changes in law. The paper casts serious doubt on the validity of the basic theses of the Anglo Saxon legal and developmental model.

Keywords: Shareholder protection, Corporate Governance, Stock market development, Law and Finance

JEL Classification: G3, G38, K22, K4

Suggested Citation

Sarkar, Prabirjit and Singh, Ajit, Law, Finance and Development Further Analyses of Longitudinal Data (October 6, 2009). Cambridge Journal of Economics, March, 2010, Available at SSRN:

Prabirjit Sarkar (Contact Author)

University of Cambridge ( email )

Centre for Business Research
Cambridge, CB2 1AG
United Kingdom

Ajit Singh

United Nations ( email )

New York, NY 10017
United States

University of Cambridge ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
+ 44 1223 350434 (Phone)
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