| Researchers have made different attempts to investigate the interaction between the quality and efficiency of a country's institutions and a country's economic performance. Within this framework, emphasis has been put on the relationship between the legal institutions and the financial system as essential factors in creating and enhancing overall economic growth. The link between legal institutions and the financial systems, however, is still somewhat controversial. My dissertation outlines a specific group of events involving payroll debit loans in Brazil and adds evidence of the relationship between the legal and the financial system. It uses empirical evidence to study the rise of Brazilian payroll debit loans as an instance of variation in institutional setting. First, I show that payroll debit loan regulation reduced the interest rates charged by the financial institutions and increased the amount of transactions as well as the sum of money. Second, I show that a judicial decision with no formal precedential effect nevertheless led banks to restrict the amount of money of the payroll debit loan and to increase its interest rates. My dissertation also reports on a survey administered to 1,362 participants regarding preferences for investment under different legal and financial institutions. Results suggest that the performance of a country's legal institutions affects the willingness to invest money in that country and that people of different gender, age, political traditions, and professional experience react differently to these institutions. |
