Market- vs. bank-based financial systems: do investor rights really matter?

Ozgur Ergungor ()

No 0101R, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: Why are common-law countries market-dominated and civil-law countries bank-dominated when either financial structure can promote economic growth? This paper provides an explanation tied to legal traditions. Civil-law courts have been less effective in resolving conflicts than common-law courts because civil-law judges traditionally refrain from interpreting the codes and creating new rules. Banks can induce borrowers to honor their obligations by threatening to withhold services that only banks can provide.

Keywords: Comparative law; Financial markets (search for similar items in EconPapers)
Date: 2002
New Economics Papers: this item is included in nep-fmk and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.26509/frbc-wp-200101r Persistent link
https://www.clevelandfed.org/-/media/project/cleve ... cial-systems-pdf.pdf Full text (application/pdf)

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:fip:fedcwp:0101

Ordering information: This working paper can be ordered from

DOI: 10.26509/frbc-wp-200101r

Access Statistics for this paper

More papers in Working Papers (Old Series) from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().