This paper proposes and empirically validates four theories of why legal origin influences growth and welfare through finance. It is a natural extension of "Law and finance: why does legal origin matter?" by Thorsten Beck, Asli Demirgüç-Kunt and Ross Levine (2003). We find only partial support...

This Article examines a previously overlooked policy interdependence between the International Monetary Fund (“IMF”) and the Basel Committee on Banking Supervision (“Basel Committee”), which results from economic dynamics associated with the “banking-sovereign nexus.” The failure of...

A growing body of post-global financial crisis (2007-2008) literature documents several undesirable effects of enlarged financial sectors. One of these effects is the 'growth cost' of excessive finance, which reports that the finance-growth relationship is non-monotonic, and that a credit...

There is now considerable evidence that a range of institutional, legal, cultural, political and religious variables determine financial development. But economists have conjectured that the presence of diversification opportunities in the real economy can also shape the development of the...

Theoretical and empirical research has shown that a sound and effective financial system is critical for economic development and growth. The financial system, however, is also subject to boom and bust cycles and fragility, with negative repercussions for the real economy. Further, the political...

This paper elucidates the key debates surrounding the optimal design of financial systems and institutions: bank-based versus market-based; universal versus specialized banking; relationship versus arms-length banking. The paper also examines the historical pattern of financial system development...