Legal origin and financial development: A propensity score matching analysis

Abstract

We revisit the impact of legal origin on financial development using propensity score matching and a new financial development index on a sample of 178 countries over 1980-2016. German civil law countries are found to have the strongest positive impact on financial development. English common law countries follow. French and Scandinavian civil law countries have a negative impact on financial development while Socialist legal origin records no significant effect. When decomposing the measure of financial development into financial markets and financial institutions' development, we find that German civil law promotes both while English common law promotes only financial institutions development.

Stock co‐movement and governance bundles: Does the quality of national governance moderate this relationship?

“…We also adopted the statistical significance approach following the ‘ sequential elimination of regressors ’ technique 8 . (see Cushman & De Vita, 2017; De Vita, Li, & Luo, 2020). Consequently, we dropped the non‐statistically significant covariate(s) at the 0.05 level, leaving leverage, SDROA, market capitalization and Size as the first phase covariates used to evaluate the propensity score.…”

“…2), in spite of the fact that adding insignificant constructs or variables doesn't prompt or lead to a one-sided (or biased) evaluation, it however, increases their variance". (Vita et al, 2020) Finally, we calculate the sensitivity test on the treatment with the nearest neighbor technique, also known as the Average treatment on the Treated effect (ATT), which relates to the average score of the difference in the result for each treatment and control unit that is matched to the propensity score. Having said that, three additional matching algorithms were also employed to further measure ATT for reliability: specifically, ATT radius, ATT 7.…”

“…2), in spite of the fact that adding insignificant constructs or variables does not prompt or lead to a one‐sided (or biased) evaluation, it however, increases their variance’. ( De Vita et al, 2020 )…”

The nexus between entrepreneurship and property rights: Role of legal origin in entrepreneurship, property rights, and economic growth

“…We converted TEA to natural logarithms and then standardized the obtained values. [11] Property is the property rights score obtained from the Heritage Foundation's Index of Economic Freedom. We standardized Property following the same natural logarithmic conversion procedure as that followed with TEA.…”

“…In the next section, we discuss the estimation outcomes of these three equations. [11] We converted TEA to the natural logarithms to ful ll stationarity requirements and then standardized them. The conversion process is the same for Property and Patent as for TEA.…”