Legal Determinants of External Finance
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ABSTRACT Using a sample of 49 countries, we show that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets. These findings apply to both equity and debt markets. In particular, French civil law countries have both the weakest investor protections and the least developed capital markets, especially as compared to common law countries.
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Better legal protection of the interests of shareholders and creditors promotes the flow of investment and availability of external finance to firms.
“In addition, La Porta et al. (1997) asserted that better legal protection of the interests of shareholders and creditors promote the flow of investment and availability of external finance to firms.”
From The impact of financial development on economic growth in sub-Saharan Africa. Does institutional quality matter? (2023) · cites this paper as La Porta et al. (1997)
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“In addition, La Porta et al. (1997) asserted that better legal protection of the interests of shareholders and creditors promote the fl ow of investment and availability of external fi nance to fi rms.”
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- Authors
- LA PORTA, R., LOPEZ‐DE‐SILANES, F., SHLEIFER, A., & VISHNY, R. W.
- Affiliations
- Harvard University (US)
- ORCID
- VISHNY, ROBERT W.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1997-07
- Volume
- 52
- Issue
- 3
- Pages
- 1131-1150
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W1969519191
- Cited by
- 9,783
- References
- 0
- Citations by year
- 2026: 220 · 2025: 306 · 2024: 319 · 2023: 332 · 2022: 300 · 2021: 366 · 2020: 386 · 2019: 355 · 2018: 379 · 2017: 393 · 2016: 419 · 2015: 406 · 2014: 490 · 2013: 485 · 2012: 506
- FWCI
- 456.88
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- The Journal of Finance (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Digital Access to Scholarship at Harvard (DASH) (Harvard University) (submittedVersion, cc-by)
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Economics, Econometrics and Finance › Finance › Finance, Markets, and Regulation
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Keywords
- investor protection, capital market development, stock market, debt markets, law enforcement quality, legal norms, civil law vs common law, cross-national comparison
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