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Financial Crisis as a Catalyst of Legal Reforms: The Case of Asia

Author

Listed:
  • Kawai, Masahiro

    (Asian Development Bank Institute)

  • Schmiegelow, Henrik

    (Asian Development Bank Institute)

Abstract

This paper discusses how financial crises in emerging Asia and Japan worked as catalysts for legal reforms. Findings show that six Asian countries pursued significant legal and judicial reforms following financial crises in 1997–1998, but indicators that measure the quality of legal institutions exhibit mixed results. Reforms of economic laws alone cannot improve the quality of entire legal and judicial systems of countries. What matters is the enforcement of substantive law by procedural law, the efficiency of the justice system, and other political and social factors. Long time lags may be needed to observe how de jure changes to substantive laws lead to de facto improvements of legal institutions.

Suggested Citation

  • Kawai, Masahiro & Schmiegelow, Henrik, 2013. "Financial Crisis as a Catalyst of Legal Reforms: The Case of Asia," ADBI Working Papers 446, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0446
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    References listed on IDEAS

    as
    1. Masahiro Kawai, 2005. "Reform of the Japanese banking system," International Economics and Economic Policy, Springer, vol. 2(4), pages 307-335, December.
    2. Djankov, Simeon & McLiesh, Caralee & Shleifer, Andrei, 2007. "Private credit in 129 countries," Journal of Financial Economics, Elsevier, vol. 84(2), pages 299-329, May.
    3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    4. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    5. John Armour & Simon Deakin & Prabirjit Sarkar & Mathias Siems & Ajit Singh, 2007. "Shareholder Protection and Stock Market Development: An Empirical Test of the Legal Origins Hypothesis," Working Papers wp358, Centre for Business Research, University of Cambridge.
    6. Gerardo P. Sicat, 2007. "Legal and Constitutional Disputes and the Philippine Economy," UP School of Economics Discussion Papers 200703, University of the Philippines School of Economics.
    7. Coase, R. H., 1990. "The Firm, the Market, and the Law," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226111018.
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    12. Deakin, S. & Sarkar, P., 2011. "Indian Labour Law and its Impact on Unemployment, 1970-2006: A leximetric study," Working Papers wp428, Centre for Business Research, University of Cambridge.
    13. Raouf Boucekkine & Frédéric Docquier & Fabien Ngendakuriyo & Henrik Schmiegelow & Michèle Schmiegelow, 2014. "Contract rules in codes and statutes: easing business across the cleavages of Legal Origins Theory," Post-Print hal-01463105, HAL.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial crises; legal reforms; judicial systems; legal institutions;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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