Does Law Really Matter for Stock Market Development? The Case of a South Pacific Island Economy: Fiji, 1997–2007
Fijian Studies, 2011, 9(2), 95-122
35 Pages Posted: 15 Jan 2013 Last revised: 28 Mar 2013
Date Written: June 1, 2010
In view of the prominent law-finance-economic growth theory and the continuing debate over it, this paper examines the applicability of the law–stock market development nexus in Fiji, an island economy in the South Pacific region, where economic growth performance has generally been considered disappointing. Results from an analysis of primary and secondary data indicate that stock market development over the 1997-2007 period has been very weak compared with 55 other developed and developing countries. The evidence does not support the frequently stated or implied proposition that strengthening legal institutions is an essential pre-requisite for furthering stock market development in Fiji. This finding may have implications for other developing economies in the South Pacific and elsewhere.
Keywords: Fiji, law and finance, stock market development, shareholder rights, law enforcement quality
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