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A legal theory of finance

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  • Pistor, Katharina

Abstract

This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crisis when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival of the system is at stake; that is, at its apex. It is here that power becomes salient.

Suggested Citation

  • Pistor, Katharina, 2013. "A legal theory of finance," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 315-330.
  • Handle: RePEc:eee:jcecon:v:41:y:2013:i:2:p:315-330
    DOI: 10.1016/j.jce.2013.03.003
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    Citations

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    Cited by:

    1. Cumming, Douglas & Knill, April & Richardson, Nela, 2015. "Firm size and the impact of securities regulation," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 417-442.
    2. Pistor, Katharina, 2013. "Law in Finance," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 311-314.
    3. Ding Chen & Simon Deakin, 2014. "On Heaven's Lathe: State, Rule of Law, & Economic Development," Working Papers wp464, Centre for Business Research, University of Cambridge.
    4. Engelbert Stockhammer & Collin Constantine & Severin Reissl, 2016. "Explaining the Euro crisis: Current account imbalances, credit booms and economic policy in different economic paradigms," Working Papers PKWP1617, Post Keynesian Economics Society (PKES).
    5. Jeffrey N. Gordon, 2014. "The Empty Call for Benefit-Cost Analysis in Financial Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 43(S2), pages 351-378.
    6. Pavlina R. Tcherneva, 2016. "Money, Power, and Monetary Regimes," Economics Working Paper Archive wp_861, Levy Economics Institute.
    7. Chen Ding & Deakin Simon, 2015. "On Heaven’s Lathe: State, Rule of Law, and Economic Development," The Law and Development Review, De Gruyter, vol. 8(1), pages 123-145, June.
    8. Lorenzo Sasso, 2016. "Bank Capital Structure and Financial Innovation: Antagonists or Two Sides of the Same Coin?," HSE Working papers WP BRP 66/LAW/2016, National Research University Higher School of Economics.
    9. repec:eee:riibaf:v:42:y:2017:i:c:p:480-495 is not listed on IDEAS

    More about this item

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K2 - Law and Economics - - Regulation and Business Law
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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