Securitization of LDC debt would significantly aid the international debt problem by increasing liquidity and expanding …

as inside equity and debt. We call our framework the two-stage model of firm growth. A key finding is that outside equity … promotes ex post efficiency (second stage growth) at the expense of ex ante efficiency (first stage growth), while debt works … the opposite way. This is because equity promotes replacement of the entrepreneur, while debt promotes entrenchment. So …