Law, endowments, and finance
Two theories concerning historical factors influencing financial development are studied using a sample of 70 former colonies. The law and finance theory claims that legal traditions set in place by colonizers vary when it comes to protecting the rights of private investors as against the state. The endowment theory says that the disease environment that the colonizers come in contact with is what forms durable institutions that shape financial growth. The differences between the theories are examined and while empirical results give both theories weight, it is concluded that initial endowments are more strongly linked financial intermediary and stock market development.
Publication Name: Journal of Financial Economics
Law and finance: why does legal origin matter?
Two empirical theories are provided to assess the reasons for the influence of legal origin on financial development. The main reason for this is the inability of the legal traditions to adapt to the changing economic conditions.
Publication Name: Journal of Comparative Economics
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