Why Do French Civil-Law Countries Have Higher Levels of Financial Efficiency?

Published in: Journal of Advanced Research in Law and Economics, 2(2), pp. 94-108. (2011).

27 Pages Posted: 9 Sep 2014 Last revised: 1 Apr 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: October 8, 2014

Abstract

The dominance of English common-law countries in prospects for financial development in the legal-origins debate has been debunked by recent findings. Using exchange rate regimes and economic/monetary integration oriented hypotheses, this paper proposes an “inflation uncertainty theory” in providing theoretical justification and empirical validity as to why French civil-law countries have higher levels of financial allocation efficiency. Inflation uncertainty, typical of floating exchange rate regimes accounts for the allocation inefficiency of financial intermediary institutions in English common-law countries. As a policy implication, results support the benefits of fixed exchange rate regimes in financial intermediary allocation efficiency.

Keywords: Banking; allocation efficiency; exchange rate; inflation; economic integration

JEL Classification: D61; G20; K00; P50; R10

Suggested Citation

Asongu, Simplice, Why Do French Civil-Law Countries Have Higher Levels of Financial Efficiency? (October 8, 2014). Published in: Journal of Advanced Research in Law and Economics, 2(2), pp. 94-108. (2011).. Available at SSRN: https://ssrn.com/abstract=2493152 or http://dx.doi.org/10.2139/ssrn.2493152

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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