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Article: Capital markets and legal development: The China case

TitleCapital markets and legal development: The China case
Authors
Issue Date2003
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/chieco
Citation
China Economic Review, 2003, v. 14 n. 4, p. 451-472 How to Cite?
AbstractRecent research establishes a significant positive correlation between law and finance (and hence economic growth), restarting a debate on the 'law matters' thesis. However, which way the causality goes is still not clear. The purpose of this paper is to use the ongoing reform experience of China, especially its capital market experience, to examine the direction of causality. First, we show that China's recent experience is largely consistent with Coffee's [Yale Law Journal 111 (2001, October)] 'crash-then-law' interpretation of this correlation. Indeed, it is the large and clearly defined constituency of investors that has been a key driving force behind much of the recent legal progress. The rights and economic interests of this constituency have fundamentally challenged the traditional emphasis of the Chinese legal culture on administrative and criminal sanctions, but not on civil litigation law. Second, we compare the different contributions to legal change made by the stock market and the consumer product markets. We argue that capital markets are perhaps the most conducive to the formation of a politically powerful constituency and hence more aggressive legal change, because of (1) the higher degree of commonality among interested parties and (2) immediately measurable and tangible damages. These two characteristics not only allow investors to identify with each other more easily, but also create an ideal basis for more debate in the media, which in turn promotes the development of a legal culture. © 2003 Elsevier Inc.All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/222289
ISSN
2015 Impact Factor: 1.116
2015 SCImago Journal Rankings: 0.997
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorChen, Z-
dc.date.accessioned2016-01-11T06:29:31Z-
dc.date.available2016-01-11T06:29:31Z-
dc.date.issued2003-
dc.identifier.citationChina Economic Review, 2003, v. 14 n. 4, p. 451-472-
dc.identifier.issn1043-951X-
dc.identifier.urihttp://hdl.handle.net/10722/222289-
dc.description.abstractRecent research establishes a significant positive correlation between law and finance (and hence economic growth), restarting a debate on the 'law matters' thesis. However, which way the causality goes is still not clear. The purpose of this paper is to use the ongoing reform experience of China, especially its capital market experience, to examine the direction of causality. First, we show that China's recent experience is largely consistent with Coffee's [Yale Law Journal 111 (2001, October)] 'crash-then-law' interpretation of this correlation. Indeed, it is the large and clearly defined constituency of investors that has been a key driving force behind much of the recent legal progress. The rights and economic interests of this constituency have fundamentally challenged the traditional emphasis of the Chinese legal culture on administrative and criminal sanctions, but not on civil litigation law. Second, we compare the different contributions to legal change made by the stock market and the consumer product markets. We argue that capital markets are perhaps the most conducive to the formation of a politically powerful constituency and hence more aggressive legal change, because of (1) the higher degree of commonality among interested parties and (2) immediately measurable and tangible damages. These two characteristics not only allow investors to identify with each other more easily, but also create an ideal basis for more debate in the media, which in turn promotes the development of a legal culture. © 2003 Elsevier Inc.All rights reserved.-
dc.languageeng-
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/chieco-
dc.relation.ispartofChina Economic Review-
dc.titleCapital markets and legal development: The China case-
dc.typeArticle-
dc.identifier.emailChen, Z: zchen99@hku.hk-
dc.identifier.authorityChen, Z=rp02041-
dc.identifier.doi10.1016/j.chieco.2003.09.016-
dc.identifier.scopuseid_2-s2.0-0347192990-
dc.identifier.volume14-
dc.identifier.issue4-
dc.identifier.spage451-
dc.identifier.epage472-
dc.identifier.isiWOS:000188613900009-
dc.publisher.placeNetherlands-

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