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Law and Firms' Access to Finance

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  • Thorsten Beck
  • Asli Demirguc-Kunt

Abstract

This article examines how a country's legal origin influences the operation of its financial system by using firm-level survey data across a broad cross-section of countries on the obstacles that firms face in raising external finance. Using panel regressions, the article assesses two channels through which legal origin may influence the financial system. We find that the adaptability of a country's legal system is more important for explaining the obstacles that firms face in accessing external finance than the political independence of the judiciary. Copyright 2005, Oxford University Press.

Suggested Citation

  • Thorsten Beck & Asli Demirguc-Kunt, 2005. "Law and Firms' Access to Finance," American Law and Economics Review, American Law and Economics Association, vol. 7(1), pages 211-252.
    • Handle: RePEc:oup:amlawe:v:7:y:2005:i:1:p:211-252
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    File URL: http://hdl.handle.net/10.1093/aler/ahi006
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    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • G3 - Financial Economics - - Corporate Finance and Governance

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