This paper evaluates two theories regarding the historical determinants of international differences in financial development: the law and finance theory, which emphasizes the priority given to protecting private investor rights, and the endowment theory, which focuses on the influence of disease and geographical environment on the formation of long-lasting institutions. Using a sample of former colonies, the authors explore whether the legal systems brought by colonizers and/or the initial endowments encountered by colonizers explain financial development today. The empirical results indicate that both the legal systems brought by colonizers and the initial endowments are important determinants of stock market development and private property rights protection. However, initial endowments are more robustly associated with financial intermediary development, and they explain more of the cross-country variation in financial intermediary and stock market development than legal origin. The paper also examines the role of political structure and provides robustness tests using different samples and alternative indicators of financial development.This paper evaluates two theories regarding the historical determinants of international differences in financial development: the law and finance theory, which emphasizes the priority given to protecting private investor rights, and the endowment theory, which focuses on the influence of disease and geographical environment on the formation of long-lasting institutions. Using a sample of former colonies, the authors explore whether the legal systems brought by colonizers and/or the initial endowments encountered by colonizers explain financial development today. The empirical results indicate that both the legal systems brought by colonizers and the initial endowments are important determinants of stock market development and private property rights protection. However, initial endowments are more robustly associated with financial intermediary development, and they explain more of the cross-country variation in financial intermediary and stock market development than legal origin. The paper also examines the role of political structure and provides robustness tests using different samples and alternative indicators of financial development.