A Legal Theory of Finance

Katharina Pistor 

Columbia University School of Law
May 9, 2013

Journal of Comparative Economics, Vol. 41, No. 2, 2013
Columbia Public Law Research Paper No. 13-348 
Abstract:      
This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crisis when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival of the system is at stake; that is, at its apex. It is here that power becomes salient.

Number of Pages in PDF File: 53

Full text available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2262936