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Twenty Years of 'Law & Finance': Time to Take Law Seriously

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  • Gerhard Schnyder
  • Mathias Siems
  • Ruth Aguilera
  • Centre for Business Research

Abstract

The Law and Finance School (LFS) has become an important stream of re-search in management and socio-economic studies. This paper provides the first comprehensive discussion of the first 20 years of LFS literature. Draw-ing on legal theory, we show that, despite the centrality of law to the LFS, the LFS is based on a surprisingly 'thin' theory of law. It does not provide a coherent definition of what primary function law plays in the economy, what criterion makes law 'valid' law, and what mechanism links law to ac-tors' behaviours. Therefore, contrary to existing criticisms of the LFS, we argue that the main issue is not that the LFS overstates the importance of law, but rather that it does not take law seriously enough. We propose ways in which future research could develop a more solid conceptual framework to empirically investigate the impact of law on economic and social outcomes.

Suggested Citation

  • Gerhard Schnyder & Mathias Siems & Ruth Aguilera & Centre for Business Research, 2018. "Twenty Years of 'Law & Finance': Time to Take Law Seriously," Working Papers wp501, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp501
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    File URL: https://www.jbs.cam.ac.uk/cbrwp501/
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    2. Emenalo, Chukwunonye O. & Gagliardi, Francesca, 2020. "Is current institutional quality linked to legal origins and disease endowments? Evidence from Africa," Research in International Business and Finance, Elsevier, vol. 52(C).

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    More about this item

    Keywords

    law; regulation; corporate governance; theory;
    All these keywords.

    JEL classification:

    • K0 - Law and Economics - - General
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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