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Does the law and finance hypothesis pass the test of history?

Author

Listed:
  • Aldo Musacchio
  • John D. Turner

Abstract

For the body of work known as the law and finance literature, the development of financial markets and the concentration of ownership across countries is to a large extent the consequence of the legal system nations created or inherited decades or hundreds of years ago. Despite the seemingly historical nature of this explanation, most of the body of work supporting the law and finance hypothesis has been ahistorical. This paper summarises the business history literature and provides evidence on investor protection and financial development over the long run that challenges the main tenets of the law and finance literature.

Suggested Citation

  • Aldo Musacchio & John D. Turner, 2013. "Does the law and finance hypothesis pass the test of history?," Business History, Taylor & Francis Journals, vol. 55(4), pages 524-542, June.
    • Handle: RePEc:taf:bushst:v:55:y:2013:i:4:p:524-542
    DOI: 10.1080/00076791.2012.741976
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    References listed on IDEAS

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    1. Stanley L. Engerman & Kenneth Lee Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economies," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 41-110.
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