This paper examines the impact of legal origin on financial development, focusing on two theoretical channels: the "political" channel and the "adaptability" channel. The political channel suggests that legal traditions prioritize either individual investor rights or state power, affecting property rights and financial markets. The adaptability channel posits that legal systems that can quickly adjust to changing commercial conditions foster more effective financial development. Using historical comparisons and cross-country regressions, the authors find that legal origin matters for financial development because legal traditions differ in their ability to adapt efficiently to evolving economic conditions. The results support the adaptability channel, indicating that legal systems that are more adaptable, such as those with a common law background, tend to have higher levels of financial development. The political channel, while not rejected, is less consistently associated with financial development. The study also controls for other potential determinants of financial development, such as latitude and independence, to ensure the robustness of the findings.This paper examines the impact of legal origin on financial development, focusing on two theoretical channels: the "political" channel and the "adaptability" channel. The political channel suggests that legal traditions prioritize either individual investor rights or state power, affecting property rights and financial markets. The adaptability channel posits that legal systems that can quickly adjust to changing commercial conditions foster more effective financial development. Using historical comparisons and cross-country regressions, the authors find that legal origin matters for financial development because legal traditions differ in their ability to adapt efficiently to evolving economic conditions. The results support the adaptability channel, indicating that legal systems that are more adaptable, such as those with a common law background, tend to have higher levels of financial development. The political channel, while not rejected, is less consistently associated with financial development. The study also controls for other potential determinants of financial development, such as latitude and independence, to ensure the robustness of the findings.