Does Trust Beneficiary Protection Affect the Performance of Trust Companies? An Analysis Based on the Theory of Law and Finance

Jinxian Li
Additional contact information
Jinxian Li: College of Finance and Statistics, Hunan University, Changsha, China

Journal of Economic Analysis, 2024, vol. 3, issue 1, 79-98

Abstract: Trust beneficiary protection constitutes an important legal system in the trust industry. This paper, based upon the study approach of the “Theory of Law and Finance”, establishes the trust beneficiary protection index of China. We also test the influence of trust beneficiary protection on the performance of trust companies. As indicated by our study’s results, an “inverted U-shaped” relationship exists between the degree of trust beneficiary protection and the performance of trust companies. In a period when the trust law system has not yet been well established, strengthening trust beneficiary protection could help facilitate the growth of trust company performance. However, this facilitation effect gradually diminishes as the trust law system becomes more perfect. This in turn means that, after reaching a certain peak, conferring the beneficiary with more rights of supervision and participation would cause the performance of trust companies to decline. Improving regional legal environments could also help facilitate the growth of trust company performance. In addition, this facilitation effect is subject to the influence of the nature of trust company controllers. In trust companies controlled by local state-owned capitals, we find that the facilitation effect of the improvement of regional legal environments on trust company performance is inhibited. In trust companies controlled by non-state-owned capitals, however, the facilitation effect of the improvement of regional legal environments on trust company performance is enhanced.

Keywords: Trust beneficiary protection; theory of law and finance; trust company performance (search for similar items in EconPapers)
Date: 2024
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.anserpress.org/journal/jea/3/1/47/pdf (application/pdf)
https://www.anserpress.org/journal/jea/3/1/47 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bba:j00001:v:3:y:2024:i:1:p:79-98:d:158

Access Statistics for this article

Journal of Economic Analysis is currently edited by Ramona Wang

More articles in Journal of Economic Analysis from Anser Press
Bibliographic data for series maintained by Ramona Wang ().