A Research Of Creditor Protection And Financial Development Based On The Law And Financial Theory

Since the1990s, law and finance theory founded by La Porta, Lopez-de-Silanes,Shleifer and Vishny (LLSV) had been developed rapidly and become one of theforefront of theoretical and practical issues of great concern to the internationalacademic community.This study systematically reviewed the relevant theoretical literature of law andfinance theory, creditor protection theory, the transition economy theory and etc,discussed the relationship between the legal construction and financial development incountries of transition economy in-depth. The relevant research on the transitioncountries with economies based on law and finance theory at home and abroad is still inthe preliminary stage of exploration and development, then, on the basis of theoreticalresearch, compare and analyze the measure and application of domestic and foreigncreditor protection level, finally, starting from the law and finance theory, according tothe creditor protection level of the various regions in China, combined with China’slegal system and the regional financial development, the study preliminarily researchedand tested the relationship between creditor protection and regional financialdevelopment, providing empirical evidence for the applicability of law and financetheory in the regional financial development, the results could be taken as a referencefor the policy formulation of creditor protection laws and regional financial.Theoretical analysis and empirical results show that. first, no matter from theperspective of the national perspective or the regional view of east, middle and west, theresults showed positive relationship between the creditor protection and financialdevelopment level without considering the other variables and factors of governmentintervention and demonstrated that strengthening the protection of creditors, improvingthe legislation level and law enforcement environment of creditor protection canprovide a good system to support the financial development and exert positive influenceon raising the level of financial development. Second, adding the control variables, therelationship between creditor protection level and regional financial development hasbecome a significant negative correlation, indicating that the role of creditor protectionlevel on the financial development had changed and distorted while considering theother system variables. Third, when considering the local government administrativeintervention factor, the relationship between the local government administrative intervention variable and financial development level showed a significant positivecorrelation, meanwhile, the degree of negative correlation between the creditorprotection level and regional financial development further strengthened, according thisresult, the formal legal maybe not the only choice in China, the local governmentadministrative intervention mechanism improved the regional financial developmentlevel objectively as an catalytic role, however, in the respect of improving the regionalfinancial development, local government administrative intervention factor played amore significant inhibition on the function and effect of creditor legal protection, inaddition, the central region’s corruption of higher degree deepened the negativecorrelation between financial development and creditor protection which took lawenforcement as the main factor.According to the conclusions, the study put forward some targeted policyrecommendations as follows: first, improve the legislation level and law enforcement ofcreditor protection continuously; second, further improve the regional level of marketand strengthen intellectual property protection; third, take efforts to reduce the level ofcorruption and improve the regional law enforcement environment; last, strengthen theapplication of the law and finance theory according to China’s national conditions.