We model the vulnerability of an economy to a financial crisis as arising from the interaction of the degree of economic specialization and bank debt financing. The probability of a financial crisis is shown to increase in the degree of economic specialization. Bank debt financing has the...

This paper examines the effect of global diversification on firm value using a data set of US firms from 1994 to 2002. We document that global diversification enhances firm value. Specifically, we find that Tobin's q, our proxy for firm value, increases with foreign sales (measured as a fraction...