Public trust, the law, and financial investment

• 成果类型: Article
• 署名作者: Carlin, Bruce Ian; Dorobantu, Florin; Viswanathan, S.
• 署名单位: University of California System; University of California Los Angeles; The Brattle Group; Duke University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.07.001
• 发表日期: 2009
• 页码: 321-341
• 关键词: trust; regulation; Economic growth

摘要

How does trust evolve in markets? What is the optimal level of regulation and how does this affect trust formation and economic growth? In a theoretical model, we analyze these questions, given the value of social capital and the potential for growth in the market. When social capital is valuable, regulation and trustfulness are substitutes. In this case, regulation may cause lower aggregate investment and decreased economic growth. When the social capital is less valuable, regulation and trustfulness may be complements. In the paper, we analyze the optimal level of regulation and highlight the novel predictions of the model. (C) 2009 Elsevier B.V. All rights reserved.