"This essay shows that government credit-allocation schemes generate incentive conflicts that undermine the quality of bank supervision and eventually produce banking crisis. For political reasons, most countries establish a regulatory culture that embraces three economically contradictory...

This essay shows that government credit-allocation schemes generate incentive conflicts that undermine the quality of bank supervision and eventually produce banking crisis. For political reasons, most countries establish a regulatory culture that embraces three economically contradictory...

This essay shows that government credit-allocation schemes generate incentive conflicts that undermine the quality of bank supervision and eventually produce banking crisis. For political reasons, most countries establish a regulatory culture that embraces three economically contradictory...

Limited personal liability for debts has long been justified as a tool to promote entrepreneurial risk taking by providing insurance to the borrower in the event of low returns. Nonetheless, such limits erode repayment incentives, and so may increase unsecured borrowing costs. Our paper is the...

How might society ensure the allocation of credit to those who lack meaningful collateral? Two very different options that have each been pursued by a variety of societies through time and space are (i) relatively harsh penalties for default and, more recently, (ii) loan guarantee programs that...

This article takes a first step in evaluating a commonly used assumption in recent quantitative analyses of unsecured household borrowing -- the temporary exclusion of defaulting borrowers from credit markets. Exclusion from credit markets is an attractive modeling device for tractably modeling...

A comparison of models and results from selected papers on personal bankruptcy establishes how particular modeling assumptions matter for the implications of bankruptcy. For example, it can be argued that only under income processes that allow for large shocks to net worth can bankruptcy play a...