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Law, Finance, and Growth during Transition: a Survey

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Abstract

This paper surveys the literature on law, finance, and growth and assesses its relevance to transition economies. It describes the contribution, as well as the limitations of the legal view literature with regard to our understanding of the causality between financial development and economic growth. The legal view demonstrates that, through its impact on the financial system, an effective legal system indirectly promotes economic development. However, the particularities of the transition process – notably the existence of soft budget constraints – are such that the methodology and the results of the legal view cannot be applied to transition economies without provisos.

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  1. Monetary and Economic Policy Division, De Nederlandsche Bank, P.O. Box, 98, 1000 AB, Amsterdam, The Netherlands

    Ralph de Haas

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  1. Ralph de Haas
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de Haas, R. Law, Finance, and Growth during Transition: a Survey. De Economist 152, 375–402 (2004). https://doi.org/10.1023/B:ECOT.0000036577.87682.a3

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