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UM E-Theses Collection (澳門大學電子學位論文庫)

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Title

Law, politics and finance

English Abstract

Abstract of thesis entitled “Law, Politics and Finance” is submitted by Zhu Lin (M-B0-5634-8) for the degree of master of Social Sciences in Economics at the University of Macau in June 2012. No two countries have the identical development degree in this world, taking into account of endowments, regulations, culture, and the national force. The purpose of this paper is to study the determinants of financial development from the law and the politics aspects. Many economists are zealously working on the innovative view based on La Porta, Lopez-de-Silanes, Shleifer and Vishny (1996) (hereafter LLSV) “Law and the quality of its enforcement are potentially important determinants of what rights security holders have and how well these rights are protected.” I intend to examine empirically how law promotes financial development and whether politics can help to explain financial development taking the endowment factors into consideration. As in LLSV (1996), no socialist or “transition” economies are included in the sample. 49 countries are selected from Europe, North and South America, Africa, Asia and Australia. For consistency and the convenience of results’ comparison, I continue to use the same country sample. As this paper studies the impacts of law and politics on financial development through cross-country analysis, I assembled a typical data set covering legal origins, quality of legal enforcement, politics and other related macro-economic indicators in 49 countries ranging from 1990 to 2009. This paper adopts principal component analysis (PCA) to find out the proxy for financial development, which is a statistical method used to find out the III most informative proxies among a group of them. Our analysis yields the following results: 1) the indicators measuring economic development explain the financial development well; inequality and inflation rate will make finance deteriorate. 2) The France or Spain legal origin countries don’t have a high rate of financial development, while countries with German legal origin are the opposite. Still common law countries are good for financial development. As expected, institutional development and financial development are positively correlated. 3) Democracy is good for financial development. But when autocracy plays an important role, polity will hinder financial development; openness has a causal effect on financial development and they are positively related.

Issue date

2012

Author

Zhu, Lin

Faculty

Faculty of Social Sciences and Humanities

Degree

M.Soc.Sc.

Subject

Law and economic development

International finance -- Law and legislation

Financial institutions -- Law and legislation

Commercial law

Economics -- Department of Economics

Supervisor

Ho, Wai Hong

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Location
1/F Zone C
Library URL
991000935149706306