This thesis analyses the roles of law and informal institutions in the interactions of large industrial companies, investors and stockbrokers in the Mexican equity market between 1975 and 2005. It shows that those market players combine official and informal solutions which creates an institutional environment that has not maintained levels of public trust that existing literature suggests are essential to sustain financial development. It proposes a theoretical framework to investigate the evolution of equity markets by bringing together the literature on 'law and finance' with one strand of the literature on institutional analysis which emphasises the influential role of informal rules, in combination with formal laws governing human behaviour. This thesis, which relies predominantly on qualitative methods, including interviews with key informants among Mexican companies, investors and financial firms, shows that market players differ in their expectations about securities law depending on their characteristics and motives to take part in the equity market. An important difference exists between those economic agents who acknowledge themselves as members of a group whose dealings in the market are crucially underpinned by personal connections as the source of reciprocal trust (insiders), and those players who do not benefit from such personal ties (outsiders). Because law frequently fails to offer adequate protection to outsiders, informal solutions substitute and compete with legal institutions, sometimes in ways which are convergent with the goals of securities law, but often ways which are not; this is referred to in this thesis as the 'dominance of ineffective formal institutions' (DIFI). Accordingly, the DIFI hypothesis is put forward: the number of economic agents involved in the Mexican equity market correlates to the stretch of the personal ties that support dealing among insiders. The dissertation therefore stresses the importance of the law-in-action and of informal social norms for financial development.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:502566 |
| Date | January 2008 |
| Creators | Alvarez-Macotela, Oscar-Salvador |
| Publisher | University of East Anglia |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
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