Finance and Politics: A Review Essay Based on Kenneth Dam's Analysis of Legal Traditions in The Law-Growth Nexus
AbstractStrong financial markets are widely thought to propel economic development, with many in finance seeing legal tradition as fundamental to protecting investors sufficiently for finance to flourish. Kenneth Dam finds that the legal tradition view inaccurately portrays how legal systems work, how laws developed historically, and how government power is allocated in the various legal traditions. Yet, after probing the legal origins' literature for inaccuracies, Dam does not deeply develop an alternative hypothesis to explain the world's differences in financial development. Nor does he challenge the origins core data, which could be origins' trump card. Hence, his analysis will not convince many economists, despite that his legal learning suggests conceptual and factual difficulties for the legal origins explanations. Yet, a dense political economy explanation is already out there and the origins-based data has unexplored weaknesses consistent with Dam's contentions. Knowing if the origins view is truly fundamental, flawed, or secondary is vital for financial development policy making because policymakers who believe it will pick policies that imitate what they think to be the core institutions of the preferred legal tradition. But if they have mistaken views, as Dam indicates they might, as to what the legal traditions' institutions really are and which types of laws are effective, or what is really most important to financial development, they will make policy mistakes -- potentially serious ones.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Literature.
Volume (Year): 47 (2009)
Issue (Month): 3 (September)
Find related papers by JEL classification:
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jackson, Howell E. & Roe, Mark J., 2009. "Public and private enforcement of securities laws: Resource-based evidence," Journal of Financial Economics, Elsevier, Elsevier, vol. 93(2), pages 207-238, August.
- Roe, Mark J., 2002.
"Political Determinants of Corporate Governance: Political Context, Corporate Impact,"
OUP Catalogue, Oxford University Press,
Oxford University Press, number 9780199240746, October.
- Roe, Mark J., 2006. "Political Determinants of Corporate Governance: Political Context, Corporate Impact," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199205301, October.
- Easterly, William, 2007. "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics, Elsevier, Elsevier, vol. 84(2), pages 755-776, November.
- Roe, Mark J., 2007. "Juries and the political economy of legal origin," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 294-308, June.
- Richard Sylla, 2006. "Schumpeter Redux: A Review of Raghuram G. Rajan and Luigi Zingales's Saving Capitalism from the Capitalists," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 44(2), pages 391-404, June.
- Matias Braun & Claudio Raddatz, 2008. "The Politics of Financial Development: Evidence from Trade Liberalization," Journal of Finance, American Finance Association, American Finance Association, vol. 63(3), pages 1469-1508, 06.
- Asongu Simplice, 2011.
"Law, Finance and Investment: does legal origin matter in Africa?,"
11/013, African Governance and Development Institute..
- Simplice Asongu, 2014. "Law, Finance and Investment: Does Legal Origin Matter in Africa?," The Review of Black Political Economy, Springer, Springer, vol. 41(2), pages 145-175, June.
- Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, Elsevier, vol. 15(C), pages 1-33.
- Hans Degryse & Thomas Lambert & Armin Schwienbacher, 2013.
"The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries,"
CESifo Working Paper Series
4527, CESifo Group Munich.
- Degryse, Hans & Lambert, Thomas & Schwienbacher, Armin, 2013. "The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9621, C.E.P.R. Discussion Papers.
- Degryse, H.A. & Lambert, T. & Schwienbacher, A., 2013. "The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries," Discussion Paper, Tilburg University, Center for Economic Research 2013-046, Tilburg University, Center for Economic Research.
- Amat Adarov & Robert Tchaidze, 2011. "Development of Financial Markets in Central Europe," IMF Working Papers 11/101, International Monetary Fund.
- Naomi R. Lamoreaux, 2014. "Revisiting American Exceptionalism: Democracy and the Regulation of Corporate Governance in Nineteenth-Century Pennsylvania," NBER Working Papers 20231, National Bureau of Economic Research, Inc.
- Jean-Claude Cosset & Charles Martineau & Anis Samet, 2012. "Do Political Institutions Affect the Choice of the U.S. Cross-Listing Venue?," Cahiers de recherche, CIRPEE 1210, CIRPEE.
- Naomi R. Lamoreaux, 2014. "Revisiting American Exceptionalism: Democracy and the Regulation of Corporate Governance in Nineteenth-Century Pennsylvania," NBER Chapters, in: Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective National Bureau of Economic Research, Inc.
- Haque, Faizul & Arun, Thankom & Kirkpatrick, Colin, 2011. "The political economy of corporate governance in developing economies: The case of Bangladesh," Research in International Business and Finance, Elsevier, Elsevier, vol. 25(2), pages 169-182, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.