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Why do French civil-law countries have higher levels of financial efficiency?

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  • Simplice A., Simplice

Abstract

The dominance of English common-law countries in prospects for financial development in the legal-origins debate has been debunked by recent findings. Using exchange rate regimes and economic/monetary integration oriented hypotheses, this paper proposes an “inflation uncertainty theory” in providing theoretical justification and empirical validity as to why French civil-law countries have higher levels of financial allocation efficiency. Inflation uncertainty, typical of floating exchange rate regimes accounts for the allocation inefficiency of financial intermediary institutions in English common-law countries. As a policy implication, results support the benefits of fixed exchange rate regimes in financial intermediary allocation efficiency.

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  • Simplice A., Simplice, 2011. "Why do French civil-law countries have higher levels of financial efficiency?," MPRA Paper 33950, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33950
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    More about this item

    Keywords

    Banking; allocation efficiency; exchange rate; inflation; economic integration;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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