Financial Crisis as a Catalyst of Legal Reforms: The Case of Asia

This paper discusses how financial crises in emerging Asia and Japan worked as catalysts for legal reforms. Findings show that six Asian countries pursued significant legal and judicial reforms following financial crises in 1997-1998, but indicators that measure the quality of legal institutions exhibit mixed results. Reforms of economic laws alone cannot improve the quality of entire legal and judicial systems of countries. What matters is the enforcement of substantive law by procedural law, the efficiency of the justice system, and other political and social factors. Long time lags may be needed to observe how de jure changes to substantive laws lead to de facto improvements of legal institutions.