Recent empirical work has shown that financial development is important for economic growth, since well-developed financial markets are more effective at allocating capital to firms with high-value projects. This raises the question of whether firms with high return projects in countries with...

The authors reexamine the role of financial market development in the intersectoral allocation of resources. First, they characterize the assumptions underlying previous work in this area, in particular, that of Rajan and Zingales (1998). The authors argue that Rajan and Zingales (1998)...

The authors analyze the relationship between financial development and inter-industry resource allocation in the short and long run. They suggest that in the long run, economies with high rates of financial development will devote relatively more resources to industries with a"natural"reliance...

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease the financing constraints of host country firms. But if incoming foreign investors borrow heavily from domestic banks, foreign direct investment...

The authors combine the agency theory of the firm with risk diversification incentives for insiders. Principal-agent problems between insiders and outsiders force insiders to retain a larger share in their firm than they would under a perfect risk diversification strategy. The authors predict...

This paper uses panel data on the number of new firm registrations in 91 countries to study how the ease of registering a business and the magnitude of registration reforms affect new firm registrations. The authors find that the costs, days and procedures required to start a business are...

This paper examines the determinants of stock markets'vulnerability to the 2007-2008 crisis. Given that the United States (US) was the crisis epicenter, the authors analyze the factors driving the co-movement between US returns and stock returns in 83 countries. The analysis distinguishes...

The authors apply vector autoregression to firm-level panel data from 36 countries to study the dynamic relationship between firms'financial conditions and investment. They argue that by using orthogonalized impulse-response functions they are able to separate the"fundamental factors"(such as...

Using firm-level surveys for up to 73 countries, this paper explores the impact of introducing collateral registries for movable assets on firms'access to bank finance. It compares firms'access to bank finance in seven countries that introduced collateral registries for movable assets against...

This paper provides new evidence on the factors affecting protracted credit contraction in the wake of the global financial crisis. The paper applies panel vector autoregressions to a global panel that consists of quarterly data for 41 countries for the period 2000-2011 and documents that...