Article | Business History

Does the Law and Finance Hypothesis Pass the Test of History?

by Aldo Musacchio and John D. Turner


For the body of work known as the law and finance literature, the development of financial markets and the concentration of ownership across countries is to a large extent the consequence of the legal system nations created or inherited decades or hundreds of years ago. Despite the seemingly historical nature of this explanation, most of the body of work supporting the law and finance hypothesis has been ahistorical. This paper summarises the business history literature and provides evidence on investor protection and financial development over the long run that challenges the main tenets of the law and finance literature.

Keywords: law; finance; business history; Financial Markets; Financial History; Business and Shareholder Relations; Law; Financial Services Industry; United States; United Kingdom; Brazil;


Musacchio, Aldo, and John D. Turner. "Does the Law and Finance Hypothesis Pass the Test of History?" Special Issue on Law and Finance: A Business History Perspective. Business History 55, no. 4 (June 2013): 524–542.