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The Politics Of Legal Reform

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  • F. LOPEZ-DE-SILANES

Abstract

As a result of the emerging market crises of the last decade and a large body of academic research on the influence of investor protection in the development of capital markets and economic growth, there is a growing consensus that reforming the legal infrastructure supporting business should be an important component of reforms in many developing countries. But the consensus is unwieldy, as there are still many forces against reform and little agreement about what constitutes feasible legal reforms. This paper has two parts. In the first, we identify the forces for and against legal reform and review the role these forces play in episodes of reform. In the second, we seek to further our understanding of what constitutes good laws and regulatory mechanisms, and more importantly how to make them enforceable in different countries. If legal reform is to succeed, the commonly advocated principles of corporate governance in the international community must be brought down to the local political and judicial realities. Translating international corporate governance initiatives into clear and enforceable rights for creditors and shareholders that incorporate these constraints will be difficult but necessary. Bankruptcy law and corporate law reform need to be politically feasible and enforceable. Legal reforms should be complemented with carefully drafted judicial reforms, as well as market-based mechanisms that foster a culture of corporate governance.

Suggested Citation

  • F. Lopez-De-Silanes, 2002. "The Politics Of Legal Reform," G-24 Discussion Papers 17, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:g24pap:17
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    References listed on IDEAS

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    Cited by:

    1. Alvaro Forteza & Daniel Buquet & Mario Ibarburu & Jorge Lanzaro & Andrés Pereyra & Eduardo Siandra & Marcel Vaillant, 2003. "Understanding reform. The Uruguayan case," Documentos de Trabajo (working papers) 0603, Department of Economics - dECON.
    2. Enrico Perotti & Paolo Volpin, 2004. "Lobbying on Entry," Tinbergen Institute Discussion Papers 04-088/2, Tinbergen Institute.
    3. Henry, Peter B. & Lorentzen, Peter Lombard, 2003. "Domestic Capital Market Reform and Access to Global Finance: Making Markets Work," Research Papers 1820, Stanford University, Graduate School of Business.
    4. Peter Blair Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Journal of Economic Literature, American Economic Association, vol. 45(4), pages 887-935, December.
    5. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
    6. Mitsopoulos, Michael & Pelagidis, Theodore, 2007. "Does staffing affect the time to dispose cases in Greek courts?," International Review of Law and Economics, Elsevier, vol. 27(2), pages 219-244.
    7. Eduardo Siandra, 2005. "Uruguay Capital Market: Law-in-the-books or Law-in-action?," Documentos de Trabajo (working papers) 0205, Department of Economics - dECON.
    8. Michael Mitsopoulos & Theodore Pelagidis, 2010. "Greek appeals courts’ quality analysis and performance," European Journal of Law and Economics, Springer, vol. 30(1), pages 17-39, August.

    More about this item

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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