Publication:
Legal Determinants of External Finance

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1997

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Wiley-Blackwell
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La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert. W. Vishny. 1997. Legal Determinants of External Finance. The Journal of Finance 52, no. 3: 1131–1150. Portico. doi:10.1111/j.1540-6261.1997.tb02727.x.

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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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