Law, Finance, Economic Growth and Welfare: Why Does Legal Origin Matter?

Institutions and Economies, 7(2), pp. 30-55. (August, 2015)

26 Pages Posted: 9 Sep 2014 Last revised: 4 Aug 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: August 1, 2011

Abstract

This paper proposes and empirically validates four theories of why legal origin influences growth and welfare through finance. It is a natural extension of “Law and finance: why does legal origin matter?” by Thorsten Beck, Asli Demirgüç-Kunt and Ross Levine (2003). We find only partial support for the Mundell (1972), La Porta et al. (1998) and Beck et al. (2003) hypotheses that English common-law countries tend to have better developed financial intermediaries than French civil-law countries. While countries with English legal tradition have legal systems that improve financial depth, activity and size, countries with French legal origin overwhelmingly dominate in financial intermediary allocation efficiency. Countries with Portuguese legal origin fall in-between.

Keywords: Law; Financial development; Growth; Welfare

JEL Classification: G2; K2; K4; O1; P5

Suggested Citation

Asongu, Simplice, Law, Finance, Economic Growth and Welfare: Why Does Legal Origin Matter? (August 1, 2011). Institutions and Economies, 7(2), pp. 30-55. (August, 2015). Available at SSRN: https://ssrn.com/abstract=2493125 or http://dx.doi.org/10.2139/ssrn.2493125

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
183
Abstract Views
773
rank
176,427
PlumX Metrics