Journal
JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY
Volume 52, Issue -, Pages 227-239Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.intfin.2017.09.020
Keywords
Financial market development; Anti-director rights; Creditor rights; Legal origins
Categories
Funding
- University of Saskatchewan
- Edwards School of Business
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We provide a comprehensive cross-country analysis of financial development. We propose that anti-director rights (ADRs) and creditor rights could act in concert, or as substitutes, for the development of both equity and debt markets. For equity market development, we find mixed results regarding the effect of ADRs that are consistent with previous research. We also find some support that creditor rights have a positive influence on equity market development. For credit market development, we distinguish between credit provided by deposit-taking banks and that provided by non-bank financial institutions (NBFIs). Bank credit is mainly determined by creditor rights, whereas non-bank credit is mainly determined by anti-director rights. Results from ADRs and creditor rights suggest that NBFIs are more concerned with rights that protect investors from insider expropriation and are less concerned with rights that protect creditors when a firm is bankrupt. (C) 2017 Elsevier B.V. All rights reserved.
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