Legal origins shape whether former colonies have stock markets

Evidence

Moreover, the distinctive gestation of financial markets in Great Britain, and their effective absence in France, left enduring marks in national economies around the world through the subsequent growth of the British Empire. British colonies generally inherited a common-law legal tradition and its associated investor protections, whereas French colonies generally inherited a civil-law tradition. The economics literature on legal origins suggests that financial markets developed more actively in the common-law legal tradition (La Porta et al. 2008). Consistent with this argument, most former British colonies have domestic stock markets, whereas few former French colonies do, arguably because the former have legal systems with more comprehensive protection of investor rights (Weber et al. 2009). — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 104

Categorization

• XREF: Directly testifies to the controversial ‘legal origins’ thesis (La Porta et al.) — could pair with critiques of that thesis in finance and development literature. — connects to: Colonialism created the conditions for modern capitalism’s emergence — Nick Couldry & Ulises A. Mejias, The Costs of Connection: How Data Is…, 251
• QUESTION: The legal-origins literature is contested; worth checking Weber et al. 2009 and its replication status before relying on this as settled.

Broader Connections

• Colonialism created the conditions for modern capitalism’s emergence #expands (0.75) — Nick Couldry & Ulises A. Mejias, The Costs of Connection, 251