Corporate law and corporate governance. The Hungarian experience

Istvan Czajlik () and Janos Vincze ()
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Istvan Czajlik: National Bank of Hungary
Janos Vincze: Budapest University of Economic Sciences and Public Administration

No 411, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: In this paper our aim was to establish legal facts for Hungary in detail, to put the country’s situation into international context, and to find new avenues for comparative research. We updated investor protection indicators already existing in the literature, while determined enforcement indicators for the first time. We hypothesize that besides indicators the dynamics of legislation must be an important topic for research. An analysis of the dynamics of legislation in Hungary indicates that two tendencies could be observed. one responding to actual challenges, leading to more reliance on the interpretation of law by judges, the second following the German-tradition resulting in more bright line rules, and more complicated legal regulation. To make the former workable political and financial independence is a necessary, though not sufficient, condition. We emphasize that though investor protection supports the supply of outside funds, there is a demand side to external finance, and more prudential regulation can lead to less demand for external finance.

Pages: 30 pages
Date: 2004-06
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Citations: View citations in EconPapers (3)

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