We focus on four national characteristics to explain the size of the mutual fund industry across countries: law and regulation; demand characteristics; supply side factors; and the nature of the securities markets. Countries with a stronger judicial system, more stringent regulatory approval and disclosure requirements for funds tend to have a larger fund industry. This suggests that stronger regulation may be beneficial to the fund industry. Furthermore, for equity funds, the enforcement of insider trading rules has an adverse effect on the size of the mutual fund industry, consistent with the view that failure.
