What Firms Know

Mohammad Amin, Enterprise Analysis Unit, FPDEA, World Bank

Abstract

A large literature shows that common law countries perform better than civil law countries along various dimensions of the institutional environment. The present paper contributes to this literature by showing that a similar result holds for another measure of institutional quality. That is, the ease with which information on rules and regulations is available to firms is much higher in common law compared with civil law countries. Roughly, one-third of this difference can be explained by differences in the level of business regulations across the two legal traditions. We provide some plausible reasons for these findings.