The Legal Origins of Financial Development: Evidence from the Shanghai Concessions

50 Pages Posted: 17 May 2021 Last revised: 5 Sep 2021

See all articles by Ross Levine

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Chicheng Ma

The University of Hong Kong

Yuchen Xu

Peking University HSBC Business School

Date Written: May 2021

Abstract

We assemble new data on the British and French concessions in Shanghai between 1845 and 1936 to assess the legal origins view of financial development. During this period, two regime changes altered the degree to which the British common and French civil law traditions held jurisdiction over the respective concessions: the 1869 formation of the Mixed Courts strengthened Western legal jurisdiction, while the 1926 rendition agreement returned those courts to Chinese control. By examining the changing application of different legal traditions to adjacent neighborhoods within the same city, we address identification challenges associated with cross-country studies. Consistent with the legal origins view, the financial development advantage in the British concession widened after the formation of the Courts and shrank after their rendition.

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Suggested Citation

Levine, Ross Eric and Lin, Chen and Ma, Chicheng and Xu, Yuchen, The Legal Origins of Financial Development: Evidence from the Shanghai Concessions (May 2021). NBER Working Paper No. w28794, Available at SSRN: https://ssrn.com/abstract=3847539

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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2220 Piedmont Avenue
Berkeley, CA 94720
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National Bureau of Economic Research (NBER)

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Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Chicheng Ma

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Yuchen Xu

Peking University HSBC Business School ( email )

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