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Financial development and the evolution of property rights and legal institutions

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  • Miletkov, Mihail
  • Wintoki, M. Babajide

Abstract

Using a panel of 129 countries over the period from 1965 to 2008, we examine the role of financial development in the evolution of property rights and legal institutions. We postulate that changes in the level of financial development change the costs and benefits of, and the demand for property rights institutions. We predict, and find, a positive causal relationship between the level of financial development and the subsequent quality of property rights institutions, even after we control for country level heterogeneity and reverse causality. Furthermore, our analysis suggests that this relationship is especially strong in emerging market countries.

Suggested Citation

  • Miletkov, Mihail & Wintoki, M. Babajide, 2012. "Financial development and the evolution of property rights and legal institutions," Emerging Markets Review, Elsevier, vol. 13(4), pages 650-673.
  • Handle: RePEc:eee:ememar:v:13:y:2012:i:4:p:650-673
    DOI: 10.1016/j.ememar.2012.09.005
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    Cited by:

    1. Christopher A. Hartwell, 2014. "Do (successful) stock exchanges support or hinder institutions in transition economies?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-18, December.
    2. Hartwell, Christopher A., 2014. "The impact of institutional volatility on financial volatility in transition economies : a GARCH family approach," BOFIT Discussion Papers 6/2014, Bank of Finland, Institute for Economies in Transition.
    3. Jonathan A. Batten & Xuan Vinh Vo, 2016. "Bank risk shifting and diversification in an emerging market," Risk Management, Palgrave Macmillan, vol. 18(4), pages 217-235, December.
    4. Christopher A. Hartwell, 2014. "Capitalism and (versus?) democracy: stock markets and democratization in transition," Applied Economics Letters, Taylor & Francis Journals, vol. 21(14), pages 979-983, September.
    5. Bekhet, Hussain Ali & Latif, Nurul Wahilah Abdul, 2018. "The impact of technological innovation and governance institution quality on Malaysia's sustainable growth: Evidence from a dynamic relationship," Technology in Society, Elsevier, vol. 54(C), pages 27-40.
    6. Gohar S. Sedrakyan, 2018. "Can Tax Regulation and Administration Practices Impact Foreign Direct Investments?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1812, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Svatopluk Kapounek, 2017. "The Impact of Institutional Quality on Bank Lending Activity: Evidence from Bayesian Model Averaging," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 67(5), pages 372-395, October.

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    More about this item

    Keywords

    Property rights; Institutions; Financial intermediaries; Economic development;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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