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Trusts As Institutions In China’S Financial Markets, Eric Linge
Trusts As Institutions In China’S Financial Markets, Eric Linge
Eric Linge
China passed a law of trusts in 2001 intending it to be useful in financial markets. Drawing heavily from literature on economic institutions and economic development, I assess the potential success of the trust’s becoming an institution in China. The conclusion is that a legislature’s passing of a trust law does not make the trust an institution. Institutions are created once they are able to predictably incentivize and constrain behavior. China’s legal system does not generally provide predictability, and ultimately this limits the trust’s ability to develop into an institution.