The Intellectual Origin of Legal Institution and Modern Banking

We exploit differences in the hometowns of graduates from China's first specialized legal university to estimate the effect of modern court establishment on local financial development. In response to the urgent need for legal modernization, Chaoyang University was founded in 1912 and graduated more than 3,000 legal professionals. Counties with varying numbers of Chaoyang graduates had different opportunities to access specialized knowledge-legal professionalism-and consequently varied prospects for establishing modern courts. The establishment of county-level courts has a significant positive impact on the development of local banking industries, which are heavily dependent on the local legal environment. This effect is achieved through the facilitation of standardized and specialized legal services and the strengthening of trust in modern financial institutions.