Classes may have ended here at Harvard, but the Law and Economics Seminar closed the Spring on a high note with a fascinating presentation by John Coffee of his new paper Law and the Market: The Impact of Enforcement. The central thesis of the paper is that the intensity with which securities laws are enforced, rather than legal origin, explains differences in financial development across countries.
Professor Coffee’s paper contributes to a scholarly debate, now nearly a decade old, as to whether legal origin adequately explains differences in development. The seminal paper on this subject concluded that common-law nations experienced faster growth than their civil-law counterparts, but the legal origins analysis has recently come under methodological and substantive criticism. This paper argues that enforcement of securities law, rather than the source of the substantive law on the books, explains differences in financial development across countries. Professor Coffee offers very persuasive evidence for that claim, although I’m less convinced that the evidence supports the policy implications offered in the piece.
