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An Empirical Study on the Relationship between Investor Protection, Government Behavior, and Financial Development

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  • Chien-Chi Chu

    (Department of Finance, Shantou University of Business School, Shantou 515063, China
    Research Institute for Guangdong-Taiwan Business Cooperation, Shantou University, Shantou 515063, China)

  • Sang-Bing Tsai

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
    Economics and Management College, Civil Aviation University of China, Tianjin 300300, China)

  • Yinghui Chen

    (School of Accounting, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Xiyang Li

    (Department of Accounting, Finance and Economics, Griffith University, Brisbane 4111, Australia)

  • Yuming Zhai

    (School of Economics and Management, Shanghai Institute of Technology, Shanghai 201418, China)

  • Quan Chen

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China)

  • Zeng Jing

    (School of Economics & Management, Tongji University, Shanghai 200092, China)

  • Zeng-Zi Ju

    (Department of Finance, Shantou University of Business School, Shantou 515063, China
    Research Institute for Guangdong-Taiwan Business Cooperation, Shantou University, Shantou 515063, China)

  • Bin Li

    (Department of Accounting, Finance and Economics, Griffith University, Brisbane 4111, Australia)

Abstract

We studied the relationship between investor protection, government behavior, and financial development using data covering six provinces (Guangdong, Jiangsu, Shandong, Zhejiang, Henan, and Sichuan) and two provincial-level cities (Beijing and Shanghai) in China for the period 2005–2014. Using panel data estimation techniques, we found that there is a positive relationship between investor protection and financial development; by contrast, highly-intense government intervention leads to more financial impediments. Moreover, government intervention in education could promote financial development through its contribution to having a higher amount of the fund supply. Our empirical findings have important implications for policy-makers in terms of reforming the capital market regulation.

Suggested Citation

  • Chien-Chi Chu & Sang-Bing Tsai & Yinghui Chen & Xiyang Li & Yuming Zhai & Quan Chen & Zeng Jing & Zeng-Zi Ju & Bin Li, 2017. "An Empirical Study on the Relationship between Investor Protection, Government Behavior, and Financial Development," Sustainability, MDPI, vol. 9(12), pages 1-14, November.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:12:p:2199-:d:120851
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    2. Yang Gao & Yu Wang & Chien-Chi Chu & Sang-Bing Tsai & Xiaomin Du & Quan Chen, 2018. "Nonlinear Effect of Financial Efficiency and Financial Competition on Heterogeneous Firm R&D: A Study on the Combined Perspective of Financial Quantity Expansion and Quality Development," Sustainability, MDPI, vol. 10(5), pages 1-15, May.
    3. Aijun Liu & Xiaohui Ji & Sang-Bing Tsai & Hui Lu & Gang Du & Feng Li & Guodong Li & Jiangtao Wang, 2018. "An Empirical Study on the Innovation Sharing Express Box: Collaborative Consumption and the Overlay Network Design," Sustainability, MDPI, vol. 10(7), pages 1-19, June.
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