Open Access Journal Article

Does Trust Beneficiary Protection Affect the Performance of Trust Companies? An Analysis Based on the Theory of Law and Finance

by Jinxian Li a,* orcid
a
College of Finance and Statistics, Hunan University, Changsha, China
*
Author to whom correspondence should be addressed.
JEA  2024, 47; 3(1), 47; https://doi.org/10.58567/jea03010004
Received: 22 May 2023 / Accepted: 15 June 2023 / Published Online: 3 March 2024
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Abstract

Trust beneficiary protection constitutes an important legal system in the trust industry. This paper, based upon the study approach of the “Theory of Law and Finance”, establishes the trust beneficiary protection index of China. We also test the influence of trust beneficiary protection on the performance of trust companies. As indicated by our study’s results, an “inverted U-shaped” relationship exists between the degree of trust beneficiary protection and the performance of trust companies. In a period when the trust law system has not yet been well established, strengthening trust beneficiary protection could help facilitate the growth of trust company performance. However, this facilitation effect gradually diminishes as the trust law system becomes more perfect. This in turn means that, after reaching a certain peak, conferring the beneficiary with more rights of supervision and participation would cause the performance of trust companies to decline. Improving regional legal environments could also help facilitate the growth of trust company performance. In addition, this facilitation effect is subject to the influence of the nature of trust company controllers. In trust companies controlled by local state-owned capitals, we find that the facilitation effect of the improvement of regional legal environments on trust company performance is inhibited. In trust companies controlled by non-state-owned capitals, however, the facilitation effect of the improvement of regional legal environments on trust company performance is enhanced.

Keywords: Trust beneficiary protection; theory of law and finance; trust company performance;
Copyright: © 2024 by Li. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
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ACS Style
Li, J. Does Trust Beneficiary Protection Affect the Performance of Trust Companies? An Analysis Based on the Theory of Law and Finance. Journal of Economic Analysis, 2024, 3, 47. https://doi.org/10.58567/jea03010004
AMA Style
Li J. Does Trust Beneficiary Protection Affect the Performance of Trust Companies? An Analysis Based on the Theory of Law and Finance. Journal of Economic Analysis; 2024, 3(1):47. https://doi.org/10.58567/jea03010004
Chicago/Turabian Style
Li, Jinxian 2024. "Does Trust Beneficiary Protection Affect the Performance of Trust Companies? An Analysis Based on the Theory of Law and Finance" Journal of Economic Analysis 3, no.1:47. https://doi.org/10.58567/jea03010004
APA style
Li, J. (2024). Does Trust Beneficiary Protection Affect the Performance of Trust Companies? An Analysis Based on the Theory of Law and Finance. Journal of Economic Analysis, 3(1), 47. https://doi.org/10.58567/jea03010004

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