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Law and Finance: Critiques

The work of the law and finance school has generated a lot of criticism. The criticisms can be categorized under three headings.

1. Empirical problems 
For example, Holger Spamann, using primary legal documents, re-codes the investor protection measures of La Porta, Lopez-de-Silanes, Shleifer and Vishny and finds that none of their results hold with his more accurate measure (click here).  See also work by Dam and Graff.

2. Legal origin is a proxy

3. Historical evidence
See the next post for more on this.

Click here to read the response of La Porta, Lopez-de-Silanes and Shleifer to their critics.

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