Financial Development, Property Rights, and Growth

Posted: 28 Feb 2004

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Luc Laeven

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

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Abstract

In countries with more secure property rights, firms might allocate resources better and consequentially grow faster as the returns on different types of assets are more protected against competitors' actions. Using data on sectoral value added for a large number of countries, we find evidence consistent with better property rights leading to higher growth through improved asset allocation. Quantitatively, the growth effect is as large as that of improved access to financing due to greater financial development. Our results are robust using various samples and specifications, including controlling for growth opportunities.

Suggested Citation

Claessens, Stijn and Laeven, Luc A., Financial Development, Property Rights, and Growth. Journal of Finance, Vol. 58, No. 6, pp. 2401-2436. Available at SSRN: https://ssrn.com/abstract=509563

Stijn Claessens

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Luc A. Laeven (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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