Strong Financial Laws Without Strong Enforcement: Is Good Law Always Better than No Law?

37 Pages Posted: 20 Apr 2013

See all articles by Mark Humphery-Jenner

Mark Humphery-Jenner

UNSW Business School; Financial Research Network (FIRN)

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Date Written: June 2013

Abstract

This article examines whether strong laws are effective when regulatory institutions are weak. This has become especially relevant due to criticisms of financial market regulation in the United States. I test the impact of imposing strong laws on a weak regulatory environment by using China's principled reforms to market manipulation law as a natural experiment. The results from difference‐in‐difference tests suggest that China's principled law reforms did not improve the market's information environment, as proxied by the level of informed trade and information asymmetry. This implies that principled law reform is ineffective if the regulatory environment is weak.

Suggested Citation

Humphery-Jenner, Mark, Strong Financial Laws Without Strong Enforcement: Is Good Law Always Better than No Law? (June 2013). Journal of Empirical Legal Studies, Vol. 10, Issue 2, pp. 288-324, 2013, Available at SSRN: https://ssrn.com/abstract=2254181 or http://dx.doi.org/10.1111/jels.12011

Mark Humphery-Jenner (Contact Author)

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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