Creditors’ Protection Law and Financial Development in France, Germany, Uk and Usa, 1970-2005
Abstract: This study re-examines the theory of legal-origin on the basis of a new longitudinal dataset on creditor protection for four OECD countries over a long time span 1970-2005. It observes that the civil law countries (France and Germany) provided better creditor protection relating to debtors’ control while the common law countries (UK and USA) provided better creditor protection relating to credit contract and insolvency. Through dynamic panel data modelling our study shows that debtors’ control has a long-term favourable effect on credit market expansion while the credit contract component of creditor protection has the opposite effect. Keywords: Creditor Protection, Legal Origin Theory and Law and Finance. JEL Codes: G30, G38, K22, K40
