This essay is an entry in the forthcoming Encyclopedia of International Economic Law from Edward Elgar Publishing, edited by Krista Nadakavukaren Schefer and Thomas Cottier and due to be published in 2016. Development is about aspiration — our longing for a better life as individuals and as a...

How does technological progress in financial intermediation affect the economy? To address this question a costly-state verification framework is embedded into a standard growth model. In particular, financial intermediaries can invest resources to monitor the returns earned by firms. The...