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Legal origin and financial development: A propensity score matching analysis
Author(s) -
De Vita Glauco,
Li Chengchun,
Luo Yun
Publication year - 2022
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.2167
Subject(s) - propensity score matching , german , economics , civil law (civil law) , sample (material) , financial market , index (typography) , matching (statistics) , common law , law , finance , financial system , political science , public law , geography , statistics , mathematics , chemistry , archaeology , chromatography , world wide web , computer science
We revisit the impact of legal origin on financial development using propensity score matching and a new financial development index on a sample of 178 countries over 1980–2016. German civil law countries are found to have the strongest positive impact on financial development. English common law countries follow. French and Scandinavian civil law countries have a negative impact on financial development while Socialist legal origin records no significant effect. When decomposing the measure of financial development into financial markets and financial institutions' development, we find that German civil law promotes both while English common law promotes only financial institutions development.