An increasingly popular view holds that institutions--in particular, the rule of law--are the keys to unlocking the developing world's full growth potential. But what exactly does this mean? Which legal institutions matter and why? How can policymakers use this knowledge to promote growth? In The Law-Growth Nexus, Kenneth Dam brings five decades of experience as a legal scholar and policymaker to bear upon these questions. After reviewing the burgeoning literature on legal institutions and economic development, Dam unpacks the "rule of law" concept. Successive chapters analyze enforcement, contracts, and property rights—the three concepts that collectively define rule of law—and examine their roles in the real estate and financial sectors. Dam uses an extended analysis of China to assess the importance of the rule of law. This case study illustrates several of the book's central themes, including the difficulty of building a strong, independent judiciary and firstclass financial sector. The stark fact is that many parts of what we call the developing world have stopped developing, while other regions have seen a slowdown in once-promising growth. Could new or better legal institutions help jumpstart these economies? In exploring this question, Th e Law-Growth Nexus goes beyond regression results to examine the underlying mechanisms through which the law, the judiciary, and the legal profession influence the economy. The result is essential reading for analysts and policymakers facing the challenges of legal and economic reform.

Imperfect legal systems and embryonic financial systems are not uncommon features of many emerging market and developing economies. However, the remarkable economic growth taking place among the economies of South Asia, despite poorly functioning legal systems and emerging financial systems is paradoxical to the law-finance-growth nexus widely accepted by academics and international organisations.This article explores the role of law and legal institutions in the finance-growth nexus and seeks to bring a focus to the quest for economic growth among emerging market and developing economies. It argues that the countries of South Asia are among a growing number of emerging market and developing economies in direct contradiction to the law-finance-growth nexus. It questions the 'law matters' premise in the context of the emerging market and developing economies in South Asia experiencing rapid growth in the recent past and the applicability of the law-finance-growth nexus. The proposition advanced is that economic growth among these countries is not premised upon well-established legal systems or mature financial systems as broadly accepted and advanced by the literature.

This book explores the role of law and regulation in sustaining financial markets in both developed and developing countries, particularly the European Union, United States and China. The central argument of this book is that law matters for the operation of financial markets, which, in turn, significantly influences the performance of firms, industries, and economies. The Role of Law and Regulation in Sustaining Financial Markets is divided into four parts. Part one addresses the connection between law, financial development, and economic growth. Part two deals with the role of financial regulation, which can be used to correct market failures, such as negative externalities, information asymmetries, and monopolies. Part three focuses on the design, functioning, and performance of different financial instruments. Part four examines the topic of Corporate Social Responsibility. This book contributes to the ‘law and finance’ literature by studying certain conventional issues, such as the relationship between finance and economic growth, and the effects of regulatory quality on financial development, from new perspectives and/or with new evidence, data, and cases. It also explores novel topics, such as project finance contracts, insurance and climate change, the shadow banking system, that have been overlooked in current literature. This book is meaningful not only for the EU and the US, which have suffered considerably from the financial crisis of 2008, but also for China, which is struggling to build a sound institutional infrastructure to govern its increasingly complicated financial system. By comparing the regulatory philosophies and practices of the EU, the US and China, this book will help the reader to understand the diverse nature of the global ‘law and finance’ nexus and avoid succumbing to the myth of "one size fits all".

Using cases on individual countries, Economic Development in the Middle East and North Africa offers diverse theoretical and empirical evidence on a variety of issues facing policymakers, investors, and other stakeholders in the region.

China is an important counterexample to the findings in the law, institutions, finance, and growth literature: neither its legal nor financial system is well developed by existing standards, yet it has one of the fastest growing economies. We examine 3 sectors of the economy: the State Sector (state-owned firms), the Listed Sector (publicly listed firms), and the Private Sector (all other firms with various types of private and local government ownership). The law-finance-growth nexus established by existing literature applies to the State and Listed Sectors: with poor legal protections of minority and outside investors, external markets are weak, and the growth of these firms is slow or negative. However, with arguably poorer applicable legal and financial mechanisms, the Private Sector grows much faster than the State and Listed Sectors, and provides most of the economy's growth. This suggests that there exist effective alternative financing channels and governance mechanisms, such as those based on reputation and relationships, to support this growth.

This article seeks to put the law-finance-growth nexus into the context of Africa. As of 2017, the African Securities Exchanges Association has 27 securities exchanges as full members. The Johannesburg Stock Exchange is the most developed of all, especially with respect to its market capitalization. Its socio-legal proximity with the English system may provide a good explanation to its phenomenal growth relative to the rest in the region. However, such a socio-legal proximity is indeed shared by a number of other former British colonies such as Nigeria and Zimbabwe. Law alone may not account for the rise of the Johannesburg Stock Exchange. Furthermore, this article seeks to argue whether there is a genuine need for the African countries to have a stock market, which requires highly evolved legal, market and governmental institutions and norms that often do not pre-exist in these countries. On the one hand, the article will look at Africa in general. On the other hand, it will put certain discussions into the context of selected African countries.

"Strong financial markets are widely thought to propel economic development, with many in finance seeing legal tradition as fundamental to protecting investors sufficiently for finance to flourish. Kenneth Dam, in the Law-Growth Nexus, finds that the legal tradition view inaccurately portrays how legal systems work, how laws developed historically, and how government power is allocated in the various legal traditions. Yet, after probing the legal origins' literature for inaccuracies, Dam does not deeply develop an alternative hypothesis to explain the world's differences in financial development. Nor does he challenge the origins core data, which could be origins' trump card. Hence, his analysis will not convince many economists, despite that his legal learning suggests conceptual and factual difficulties for the legal origins explanations. Yet, a dense political economy explanation is already out there and the origins based data has unexplored weaknesses consistent with Dam's contentions. Knowing if the origins view is truly fundamental, flawed, or secondary is vital for financial development policymaking, because policymakers who believe it will pick policies that imitate what they think to be the core institutions of the preferred legal tradition. But if they have mistaken views, as Dam indicates they might, as to what the legal traditions' institutions really are and which types of laws really are effective, or what is really most important to financial development, they will make policy mistakes potentially serious ones"--John M. Olin Center for Law, Economics, and Business web site.