This study looks inside a large retail-banking group to understand how corporate politics affect internal capital allocation. The group consists of a headquarters organization and about 150 member banks which own the headquarters. Our data is from the firm’s managerial accounting system and...

Abstract: We study the capacity of business associations - private, formal, noncommercial organizations designed to promote the common business interests of their members - to support contract enforcement and collective action. Inspired by recent empirical literature, our theoretical framework...

Several studies use the investment - cash flow sensitivity as a measure of financing constraints while some others disagree.The source of this disparity lies mostly in differences in opinion regarding the segregation of severely financially constrained firms from less constrained ones.We examine...

We investigate the investment-cash flow sensitivity of a large sample of the UK listed firms and confirm that investment is strongly cash flow-sensitive.Is this suboptimal investment policy the result of agency problems when managers with high discretion overinvest, or of asymmetric information...

Starting from MacIntyre's virtue ethics, we investigate several codes of conduct of banks to identify the type of virtues that are needed to realize their mission. Based on this analysis, we define three core virtues: honesty, due care and accuracy. We compare and contrast these codes of conduct...

One of the most important recent innovations in financial markets has been the development of credit derivative products that allow banks to more actively manage their credit portfolios than ever before.We analyze the effect that access to these markets has had on the lending behavior of a...

This paper provides the first empirical evidence on how home-country regulation and supervision affects bank risk-tailing in host-country markets. We analyze lending by 136 banks to 8,253 firms in 1,513 different localities across 13 countries. We find strong evidence that laxer regulatory...

We investigate what determines the maturity of loans to small, informationally opaque businesses.We find that longer maturities are associated with collateral pledges, better financial condition, good credit history, and less informational opacity of the borrower.However, we do not find a...

Abstract: We compare default rates on conventional and Islamic loans using a comprehensive monthly dataset from Pakistan that follows more than 150,000 loans over the period 2006:04 to 2008:12. We find robust evidence that the default rate on Islamic loans is less than half the default rate on...

We provide the first evidence on how the introduction of information sharing via a public credit registry affects banks’ lending decisions. We employ a unique dataset containing detailed information on credit card applications and decisions from one of the leading banks in China. While we do...