The research underlying this volume began with a question: why do financial crises occur and what can be done to prevent such crises and reduce their impact when they do occur? Today, following a series of financial crises around the world over the past fifteen years, this question to some extent has been answered through the establishment of a system of international standards directed towards the overall goal of financial stability. If one is interested in financial crises, it follows that one is also interested in the broader role of the financial system: clearly, financial crises are deleterious to economic growth, but can the financial system also have positive effects? Likewise, this question is now generally answered in the affirmative: an effectively functioning financial system is important for economic growth, though (as demonstrated by the existence of financial crises) finance also brings risks. The question then becomes how to develop a financial system which supports economic growth (and thereby economic development) in the context of financial stability. The purpose of this volume is to address this question.

In the past fifteen years, the recognition of the importance of law in an economy has increased greatly. It is now commonly accepted that property rights, enforcement of contracts and the rule of law are significant for economic development. Unfortunately, in most cases, the literature – especially the economic literature – has still not progressed significantly beyond this basic realization. The question arises: what do these ideas mean in practice?