The Political Economy of Investor Protection

Pietro Tommasino

No 604, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Why do some countries suffer from backward financial institutions and weak corporate governance rules? We show that, even if, overall, the economy would benefit corporate governance reforms, not all the agents would stand to gain from the improvement. In particular, entrepreneurs and firms that are already well-established fear better rules, which would allow the financing of new firms and enhance competition. As a consequence, industry incumbents will try to influence the political process to block the reforms. If national political institutions are weak, these efforts are likely be successful.

Keywords: Corporate Governance; Entry; Financial Development; Investor Protection; Politics (search for similar items in EconPapers)
JEL-codes: G30 G38 K22 K42 L11 O16 P16 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-dev, nep-ent, nep-law and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_604_06

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