Premium
Law and Finance: Common Law and Civil Law Countries Compared—An Empirical Critique
Author(s) -
GRAFF MICHAEL
Publication year - 2008
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2007.00596.x
Subject(s) - civil law (civil law) , comparative law , law , commercial law , public law , common law , private law , political science , economics , municipal law , soundness , law and economics , linguistics , philosophy
The ‘theory of law and finance’ argues that the common law system provides a better framework for financial development and economic growth than the civil law tradition. This paper identifies a number of problems that cast doubt on the soundness of the empirical basis of this literature. However, this analysis supports the idea that the legal tradition is a major factor in shaping corporate law. In particular, while there is not much evidence that common law countries protect financial investors better than civil law countries I find support for the assumption that financial investors are treated differently across legal families.