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The Legal Origins of Financial Development: Evidence from the Shanghai Concessions

Author

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  • ROSS LEVINE
  • CHEN LIN
  • CHICHENG MA
  • YUCHEN XU

Abstract

The primary challenge to assessing the legal origins view of comparative financial development is identifying exogenous changes in legal systems. We assemble new data on Shanghai's British and French concessions between 1845 and 1936. Two regime changes altered British and French legal jurisdiction over their respective concessions. By examining the changing application of different legal traditions to adjacent neighborhoods within the same city and controlling for military, economic, and political characteristics, we offer new evidence consistent with the legal origins view: the financial development advantage in the British concession widened after Western legal jurisdiction intensified and narrowed after it abated.

Suggested Citation

  • Ross Levine & Chen Lin & Chicheng Ma & Yuchen Xu, 2023. "The Legal Origins of Financial Development: Evidence from the Shanghai Concessions," Journal of Finance, American Finance Association, vol. 78(6), pages 3423-3464, December.
    • Handle: RePEc:bla:jfinan:v:78:y:2023:i:6:p:3423-3464
    DOI: 10.1111/jofi.13284
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    Cited by:

    1. Bruno Emmanuel Ongo Nkoa & Thierry Mamadou Asngar & Charles Christian Atangana Zambo & Donald Ferdinand Okere Atanga, 2023. "Does institutional quality accelerate the growth of financial markets in Africa?," SN Business & Economics, Springer, vol. 3(4), pages 1-26, April.
    2. Han, Ziteng & Chen, Lingxi & Zhong, Teng, 2025. "Mixed-ownership reform and AI adoption in state-owned enterprises: A pre-registered report," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    3. Leandro de Lima, Samuel Lyncon & da Silva, Tarcísio Pedro & da Rocha Armada, Manuel José, 2025. "Moderating effect of the capital structure on the idiosyncratic risk and market performance of listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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