Law, Institutions, and Finance in China and India

Franklin Allen, Rajesh Chakrabarti, Sankar De, Jun ‘QJ’ Qian and Meijun Qian

in Emerging Giants

Published in print April 2010 | ISBN: 9780199575077
Published online September 2010 | e-ISBN: 9780191722141 | DOI:
Law, Institutions, and Finance in China and India

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This chapter examines and compares the legal and institutional set-ups in China and India. China differs from most of the countries studied in the law, institutions, finance, and growth literature: Its legal and financial systems as well as institutions are all underdeveloped, but its economy has been growing at a very fast rate. Despite its English common-law origin and British-style judicial system and democratic government, there is enough documented evidence to suggest that the effective level of investor protection and the quality of legal institutions in India are quite weak as well. However, this has evidently not prohibited growth in either country. Small and high growth firms in both countries make extensive use of informal and relationship-based arrangements to finance growth.

Keywords: India; law and finance; institutions; growth; banks; markets; SME sector

Chapter.  21906 words.  Illustrated.

Subjects: Economic Development and Growth

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