Beyond Legal Origin and Checks and Balances : Political Credibility, Citizen Information, and Financial Sector Development
The existing literature emphasizes and
contrasts the role of political checks and balances and
legal origin in determining the pace of financial sector
development. This paper expands substantially on one aspect
of this debate: the fact that government actions that
promote financial sector development, whether prudent
financial regulation or secure property and contract rights,
are public goods and sensitive to political incentives to
provide public goods. Tests of hypotheses emanating from
this argument yield four new conclusions. First, two key
determinants of those incentives-the credibility of
pre-electoral political promises and citizen information
about politician decisions-systematically promote financial
sector development. Second, these political factors, along
with political checks and balances, operate in part through
their influence on the security of property rights, an
argument asserted but not previously tested. Third, contrary
to findings elsewhere in the literature, the political
determinants of financial sector development are significant
even in the presence of controls for legal origin. Finally,
and again in contrast to the literature, the evidence here
suggests that legal origin primarily proxies for political
phenomena. Legal origin is a largely insignificant
determinant of financial sector development when those
phenomena are fully taken into account.
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Bibliographic Details
| Main Author: |
Keefer, Philip |
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| Language: | English |
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| Published: |
World Bank, Washington, DC
2007-03
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| Subjects: | BALANCE SHEETS,
BUREAUCRATIC QUALITY,
CHECKS AND BALANCES,
CIVIL LAW,
COMMON LAW,
COMPETITIVENESS,
CORRUPTION,
CREDIBILITY OF GOVERNMENT COMMITMENTS,
CREDIBILITY OF GOVERNMENTS,
DEMOCRACY,
ECONOMIC DEVELOPMENT,
ECONOMIC GROWTH,
ECONOMY LITERATURE,
EMPIRICAL EVIDENCE,
EMPIRICAL RESEARCH,
EMPIRICAL WORK,
ENDOGENOUS VARIABLE,
EXECUTIVE DIRECTORS,
EXPROPRIATION,
FINANCIAL DEVELOPMENT,
FINANCIAL INSTITUTIONS,
FINANCIAL INTERMEDIARIES,
FINANCIAL LEGISLATION,
FINANCIAL MARKETS,
FINANCIAL SECTOR,
FINANCIAL TRANSACTIONS,
GDP,
GOVERNMENT ACTIONS,
GOVERNMENT COALITION,
GOVERNMENT POLICY,
GROWTH EQUATIONS,
GROWTH LITERATURE,
INCUMBENT,
INSTITUTIONAL VARIABLES,
INSURANCE,
INSURANCE COMPANIES,
INTEREST GROUP,
INTEREST RATES,
LEGAL SYSTEM,
LEGAL SYSTEMS,
MONETARY POLICY,
NATIONAL DEFENSE,
PER CAPITA INCOME,
POLICY MAKING,
POLICY RESEARCH,
POLITICAL COMPETITION,
POLITICAL ECONOMY,
POLITICAL INSTITUTIONS,
POLITICAL OUTCOMES,
POLITICAL RISK,
PRIVATE PROPERTY,
PRIVATE PROPERTY RIGHTS,
PRIVATE SECTOR,
PROPERTY RIGHTS,
PROTECTION OF PRIVATE,
PUBLIC GOOD,
PUBLIC GOOD PROVISION,
PUBLIC GOODS,
PUBLIC INVESTMENT,
REGULATORY DECISIONS,
RULE OF LAW,
SECURE PROPERTY RIGHTS,
SIGNIFICANT IMPACT,
SOCIAL COSTS,
SOCIAL INFRASTRUCTURE,
VETO,
VOTERS,
VOTING, |
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| Online Access: | http://documents.worldbank.org/curated/en/2007/03/7419560/beyond-legal-origin-checks-balances-political-credibility-citizen-information-financial-sector-development
https://hdl.handle.net/10986/7204
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