Twenty years of 'Law and Finance': Time to take law seriously

Gerhard Schnyder, Mathias Siems, Ruth V. Aguilera

Research output: Indexed journal article Articlepeer-review

8 Citations (Scopus)


This 'state of the art' essay provides a comprehensive discussion of the Law and Finance School (LFS) literature. We show that the first two decades of the LFS have focused on empirically investigating the question 'does law matter?' Yet, despite the centrality of law to the LFS, it is based on an incoherent theory of law, which leads to shortcomings in the conceptualization and empirical testing of its hypotheses. We also observe that, rather than addressing this deficiency, the LFS has moved its focus to the contentious concept of 'legal origin'. We argue that the LFS needs to take law more seriously by returning to its initial focus on the substance of legal rules and by addressing the theoretical question 'how does law matter?' We propose venues for future research to develop a solid theoretical framework that would put the empirical investigation of law's impact on economic outcomes on a more solid footing.

Original languageEnglish
Pages (from-to)377-406
Number of pages30
JournalSocio-Economic Review
Issue number1
Publication statusPublished - 1 Jan 2021
Externally publishedYes


  • corporate governance
  • K0 law and economics (general)
  • L5 regulation and industrial policy
  • law
  • O1 economic development
  • regulation
  • theory


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