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1. 1. 1. 1. General introduction General introduction General introduction General introduction Since the late 1990s, a series of papers published in leading economics and finance journals contain evidence for a significant impact of institutions on financial and economic development (e. this literature, high-quality institutions cause financial development. In turn, financial development is a driving force behind economic growth. The historical legacy seems to play an important role in the relationship between the financial development of countries, their current institutions and their past institutions. Indeed, prominent contributions demonstrate a strong positive correlation between legal origins (common law is considered to be better than civil law) and three further elements: first, current indices of the rule of law (Acemoglu et al., al, 2003); and third, the dispersion of share ownership and the separation of ownership and control (LLS 1999). In general, shareholders are supposed to have the strongest protection in common-law countries, followed by German-style civil-law countries. Shareholder protection is the weakest in French style civil law countries. In contrast, secured creditors are supposed to be best protected in the German legal system. Consequently, common-law countries have relatively high numbers of listed firms and of initial public offerings and a relatively high ratio of stock market capitalisation to GDP. In contrast, bank finance traditionally dominates in Continental Europe. According to this point of view, the legal system determines the financial system and both determine the system of