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Legal origin and financial development: A propensity score matching analysis

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  • Glauco De Vita
  • Chengchun Li
  • Yun Luo

Abstract

We revisit the impact of legal origin on financial development using propensity score matching and a new financial development index on a sample of 178 countries over 1980–2016. German civil law countries are found to have the strongest positive impact on financial development. English common law countries follow. French and Scandinavian civil law countries have a negative impact on financial development while Socialist legal origin records no significant effect. When decomposing the measure of financial development into financial markets and financial institutions' development, we find that German civil law promotes both while English common law promotes only financial institutions development.

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  • Glauco De Vita & Chengchun Li & Yun Luo, 2022. "Legal origin and financial development: A propensity score matching analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 535-553, January.
    • Handle: RePEc:wly:ijfiec:v:27:y:2022:i:1:p:535-553
    DOI: 10.1002/ijfe.2167
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