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The Legal Origins of Financial Development: Evidence from the Shanghai Concessions

Author

Listed:
  • Ross Levine
  • Chen Lin
  • Chicheng Ma
  • Yuchen Xu

Abstract

We assemble new data on the British and French concessions in Shanghai between 1845 and 1936 to assess the legal origins view of financial development. During this period, two regime changes altered the degree to which the British common and French civil law traditions held jurisdiction over the respective concessions: the 1869 formation of the Mixed Courts strengthened Western legal jurisdiction, while the 1926 rendition agreement returned those courts to Chinese control. By examining the changing application of different legal traditions to adjacent neighborhoods within the same city, we address identification challenges associated with cross-country studies. Consistent with the legal origins view, the financial development advantage in the British concession widened after the formation of the Courts and shrank after their rendition.

Suggested Citation

  • Ross Levine & Chen Lin & Chicheng Ma & Yuchen Xu, 2021. "The Legal Origins of Financial Development: Evidence from the Shanghai Concessions," NBER Working Papers 28794, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28794
    Note: CF DEV LE
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    Cited by:

    1. Bruno Emmanuel Ongo Nkoa & Thierry Mamadou Asngar & Charles Christian Atangana Zambo & Donald Ferdinand Okere Atanga, 2023. "Does institutional quality accelerate the growth of financial markets in Africa?," SN Business & Economics, Springer, vol. 3(4), pages 1-26, April.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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