Financial System Size in Transition Economies: The Effect of Legal Origin
AbstractGorton and Winton (1998) link the size of the banking system in transition economies to financial stability. We provide empirical evidence consistent with their notion that the size of the financial system will be smaller in these countries. This effect holds even after controlling for the effect of rule of law and/or legal origin, and other relevant variables. Transition economy status, thus adds additional explanatory power to traditional law and finance explanations of financial development. Classification of transition economies by legal origin reveals that Russian legal origin has a strong negative effect on financial development. Regression analysis shows claims on the private sector/gross domestic product (GDP) to be 46 to 60 percentage points lower in the countries of the former Soviet Union, and 23 to 39 percentage points lower in non-Soviet transition economies compared to countries of English legal origin. There is a positive relation between claims on the private sector and the rule of law for a broad cross section of countries. Copyright (c) 2008 The Ohio State University.
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 Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 40 (2008)
Issue (Month): 6 (09)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cooray, Arusha, 2011. "The role of the government in financial sector development," Economic Modelling, Elsevier, vol. 28(3), pages 928-938, May.
- Buchanan, Bonnie G. & English II, Philip C. & Gordon, Rachel, 2011. "Emerging market benefits, investability and the rule of law," Emerging Markets Review, Elsevier, vol. 12(1), pages 47-60, March.
- Hryckiewicz, Aneta & Kowalewski, Oskar, 2010. "Economic determinates, financial crisis and entry modes of foreign banks into emerging markets," Emerging Markets Review, Elsevier, vol. 11(3), pages 205-228, September.
- Arusha Cooray, 2010. "Does the Size and Quality of the Government Explain the Size and Efficiency of the Financial Sector?," CAMA Working Papers 2010-32, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Aggarwal, Raj & Goodell, John W., 2014. "Cross-national differences in access to finance: Influence of culture and institutional environments," Research in International Business and Finance, Elsevier, vol. 31(C), pages 193-211.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
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.