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The Political Economy of Investor Protection

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Author Info
Pietro Tommasino () (Bank of Italy)

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Abstract

Why do some countries suffer from backward financial institutions and weak corporate governance rules? We show that, even if, overall, the economy would benefit corporate governance reforms, not all the agents would stand to gain from the improvement. In particular, entrepreneurs and firms that are already well-established fear better rules, which would allow the financing of new firms and enhance competition. As a consequence, industry incumbents will try to influence the political process to block the reforms. If national political institutions are weak, these efforts are likely be successful.

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File URL: http://www.bancaditalia.it/pubblicazioni/econo/temidi/td06/td604_06/td604/tema_604.pdf
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Publisher Info
Paper provided by Bank of Italy, Economic Research Department in its series Temi di discussione (Economic working papers) with number 604.

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Date of creation: Dec 2006
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Handle: RePEc:bdi:wptemi:td_604_06

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Postal: Via Nazionale, 91 - 00184 Roma
Web page: http://www.bancaditalia.it
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Related research
Keywords: Corporate Governance; Entry; Financial Development; Investor Protection; Politics;

Find related papers by JEL classification:
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
K22 - Law and Economics - - Regulation and Business Law - - - Corporation and Securities Law
K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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