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We study market breakdown in a finance context under extreme adverse selection with and without competitive pricing. Adverse selection is extreme if for any price there are informed agent types with whom uninformed agents prefer not to trade. Market breakdown occurs when no trade is the only...
Persistent link: https://www.econbiz.de/10005102093
We show that political booms, measured by the rise in governments’ popularity, predict financial crises above and beyond other better-known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We show that governments in emerging...
Persistent link: https://www.econbiz.de/10010822881
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. One representation...
Persistent link: https://www.econbiz.de/10010822917
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. The most general...
Persistent link: https://www.econbiz.de/10010822938
Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires that information about the backing assets – loans – not be revealed, so that bank money does not fluctuate in value, reducing the efficiency of trade. This need for opacity...
Persistent link: https://www.econbiz.de/10010784138
We argue for incorporating the financial economics of market microstructure into the financial econometrics of asset return volatility estimation. In particular, we use market microstructure theory to derive the cross-correlation function between latent returns and market microstructure noise,...
Persistent link: https://www.econbiz.de/10005126693
This note provides several generalizations of Mailath's (1987) result that incentive compatibility plus separation implies differentiability. The new results extend the theory to classic models in finance such as Leland and Pyle (1977), Glosten (1989), and De Marzo and Duffie (1999), that were...
Persistent link: https://www.econbiz.de/10008672484
Economic geography receives limited consideration in the venture capital literature. This study utilizes thirty years of data concerning companies that initially were backed by venture capital. These firms are located in Entrepreneurial Focal Points in the United States, namely: California,...
Persistent link: https://www.econbiz.de/10004967185
Do certain regions inherently enjoy an advantage in venture capital investment decisions? And how do industry characteristics affect venture capital activity? These questions fall under the reemerging study of economic geography, which suggests the importance of industrial location to economic...
Persistent link: https://www.econbiz.de/10005102076
Public concern over global climate change, resource depletion, and environmental degradation has amplified over the last several years, leading to increased demand for environmentally friendly products. Additionally, the price of Clean-Technology products has fallen. This paper examines venture...
Persistent link: https://www.econbiz.de/10008502074