The legal theory of finance: Implications for methodology and empirical research

This commentary on the LTF project highlights the importance of the idea that law ‘constructs’ finance and considers some of its methodological implications. The idea that law shapes finance implies that the legal system can be clearly differentiated in theoretical terms from the economy, and that the independent causal influence of the law on financial outcomes can be measured empirically. It will be argued that this can best be achieved by placing empirical research on law and finance in an evolutionary-theoretical perspective, which draws on related developments in game theory and systems theory, in the statistical study of law (‘leximetrics’), and in time-series econometrics.