While institutional differences have been found to affect country growth patterns, much has remained unexplained, including how economic actors "overcome" institutional weaknesses and how internationalization helps or hinders development. Banking is an institutionally-intensive activity and the...

The Argentine crisis witnessed, among other things, a deposit run, the suspension of deposit convertibility, and a "boom" in the stock market. The authors argue that this boom reflects the cost that depositors were willing to incur to get their money out of the banking system, in light of the...

This paper analyzes the effects of capital controls and crises on international financial integration, using data on stocks from emerging economies that trade in domestic and international markets. The cross-market premium (the ratio between the domestic and international market price of...

Statistics show that the sale of goods on credit is widespread among firms even when they are capital constrained and thus face relatively high costs in providing trade credit. This study provides an explanation for this by arguing that customers who possess strong market power are able to...

Whereas conventional wisdom argues that markets shut down during crises, with sellers struggling to find buyers, we find that markets continue to operate during financial turmoil, even in narrow and volatile emerging economies. Simple event studies indicate that both trading volume and trading...

The authors argue that the cross-market premium (the ratio between the domestic and the international market price of cross-listed stocks) provides a valuable measure of international financial integration, reflecting accurately the factors that segment markets and inhibit price arbitrage....

This paper surveys the theoretical and empirical literature on the macroeconomic implications of financial imperfections. It focuses on two major channels through which financial imperfections can affect macroeconomic outcomes. The first channel, which operates through the demand side of finance...

This paper surveys the literature on the linkages between asset prices and macroeconomic outcomes. It focuses on three major questions. First, what are the basic theoretical linkages between asset prices and macroeconomic outcomes? Second, what is the empirical evidence supporting these...

The authors analyze how property rights affect the allocation of firms' available resources among different types of assets. In particular, they investigate empirically for a large number of countries whether firms in environments with more secure property rights allocate available resources...