Legal Theories of Financial Development

Posted: 22 Nov 2003

See all articles by Ross Levine

Ross Levine

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

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Asli Demirgüç-Kunt

World Bank - Development Research Group; World Bank

Abstract

This paper examines legal theories of international differences in financial development. The law and finance theory stresses that legal traditions differ in terms of (i) their emphasis on the rights of private property owners vis-à-vis the state and (ii) their ability to adapt to changing commercial and financial conditions, so that historically determined legal traditions shape financial development today. Other theories reject the centrality of legal tradition in accounting for cross-country differences in financial development. The results are broadly consistent with legal theories of financial development, though it is difficult to identify the precise channel through which legal tradition influences financial development.

JEL Classification: G21, K12, O16

Suggested Citation

Levine, Ross Eric and Beck, Thorsten and Demirgüç-Kunt, Asli, Legal Theories of Financial Development. Oxford Review of Economic Policy, Vol. 17, No. 4, Winter 2001. Available at SSRN: https://ssrn.com/abstract=443960

Ross Eric Levine (Contact Author)

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

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National Bureau of Economic Research (NBER)

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Thorsten Beck

City University London - Sir John Cass Business School ( email )

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Tilburg University - European Banking Center, CentER ( email )

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Asli Demirgüç-Kunt

World Bank - Development Research Group ( email )

United States
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202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/ademirguckunt/

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