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Law of finance: Evidence from Finland

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  • Hyytinen, Ari

    ()
    (Bank of Finland)

  • Kuosa, Iikka
  • Takalo, Tuomas

    ()
    (Bank of Finland Research)

Abstract

Although it is widely acknowledged that the benefits of corporate governance reform could be substantial, systematic evidence on such reforms is scant. We both document and evaluate a contemporary corporate governance reform by constructing 18 measures of shareholder and creditor protection for Finland for the period 1980–2000. The measures reveal that shareholder protection has been strengthened whereas creditor protection has been weakened. We also demonstrate how the reform is consistent with a reorganisation of the Finnish financial market in which a bank-centred financial system shifted from relationship-based debt finance towards increasing dominance by the stock market. We find evidence that the development of shareholder protection has been a driver of the reorganisation, whereas the changes in creditor protection have mirrored market developments.

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File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/0208.pdf
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Bibliographic Info

Paper provided by Bank of Finland in its series Research Discussion Papers with number 8/2002.

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Length: 60 pages
Date of creation: 22 May 2002
Date of revision:
Handle: RePEc:hhs:bofrdp:2002_008

Contact details of provider:
Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/
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Keywords: corporate finance; financial intermediation; corporate governance;

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References

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