Governance and financial development: A cross-country analysis

Jialong Li, Min Maung and Craig Wilson

Journal of International Financial Markets, Institutions and Money, 2018, vol. 52, issue C, 227-239

Abstract: We provide a comprehensive cross-country analysis of financial development. We propose that anti-director rights (ADRs) and creditor rights could act in concert, or as substitutes, for the development of both equity and debt markets. For equity market development, we find mixed results regarding the effect of ADRs that are consistent with previous research. We also find some support that creditor rights have a positive influence on equity market development. For credit market development, we distinguish between credit provided by deposit-taking banks and that provided by non-bank financial institutions (NBFIs). Bank credit is mainly determined by creditor rights, whereas non-bank credit is mainly determined by anti-director rights. Results from ADRs and creditor rights suggest that NBFIs are more concerned with rights that protect investors from insider expropriation and are less concerned with rights that protect creditors when a firm is bankrupt.

Keywords: Financial market development; Anti-director rights; Creditor rights; Legal origins (search for similar items in EconPapers)
JEL-codes: G15 G18 G28 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:52:y:2018:i:c:p:227-239

DOI: 10.1016/j.intfin.2017.09.020

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