Financial Development , Property Rights , and Growth 1

  title={Financial Development , Property Rights , and Growth 1},
  author={Stijn Claessens},
This paper investigates how different legal frameworks not only affect the amount of external financing available, but also the allocation of resources among different types of assets. Using a simple model, we show that a firm will get less financing, and thus invest less, in a weaker legal environment. But weaker property rights also lead to an asset allocation effect with firms investing less in intangible assets. Empirically, these two effects appear to be equally important drivers of growth… CONTINUE READING
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