Key Findings
Stronger Financial Development Under British Common Law
After establishing Mixed Courts in 1869, the British concession experienced significantly higher bank density (8 more banks per km²) compared to the French concession
Impact of Legal System Change
When courts were returned to Chinese jurisdiction in 1926, bank density declined more sharply in the British concession, demonstrating the importance of legal systems
Consistent Pattern Across Chinese Cities
Analysis of 16 concessions across three other Chinese cities showed consistently stronger financial development in common law jurisdictions versus civil law areas
Comparative Bank Development After Mixed Courts (1869)
- Prior to 1869, British concession had ~2 more banks per km² than French concession
- After Mixed Courts established, gap increased to ~8 more banks per km²
- Effect particularly strong for Chinese-owned banks
Bank Performance Before and After 1926 Rendition
- Banks in British concession had higher ROA (+0.819%) before rendition
- Performance advantage disappeared after 1926 (-0.194%)
- Demonstrates impact of legal system change on bank operations
Bank Density Across Chinese Cities (1850-1936)
- Common law concessions averaged 4.97 more banks per km² than civil law areas
- Pattern consistent across all cities studied
- Effect driven primarily by Chinese-owned banks (4.38 banks/km² difference)
Contribution and Implications
- Provides first empirical evidence of legal origins effect using historical regime changes within the same city
- Demonstrates causal relationship between legal systems and financial development by controlling for other factors
- Shows importance of legal frameworks in fostering financial sector growth, particularly for domestic institutions
Data Sources
- Bank density comparison chart based on Table II regression results
- Bank performance visualization derived from Table VI ROA analysis
- Cross-city comparison chart constructed using data from Table VIII
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