This book highlights the achievements and challenges of the ongoing process of financial integration in Europe.   This unique collection will be of great interest to economists and experts in the fields of financial markets and European integration from central, commercial and investment...

This paper studies the fragility of interbank markets. Due to moral hazard and asymmetric information problems, collateral along with borrowing constraints are needed to provide appropriate incentives for banks. A key element of the analysis is the distinction between collateral based upon...

Trade credits are the main source of firm's external finance, despite they are observationally more expensive than bank loans. The aim of this paper is to study this type of credit. We describe the optimal debt structure for firms, when the latter can get funds from their banks and from their...

Using a unique data set on French firms, we show that credit constrained firms that face liquidity shocks are more likely to default on their payments to suppliers. Credit constrained firms pass on a sizeable fraction of such shocks to their suppliers. This is consistent with the idea that firms...

Fluctuations in stock prices affect corporate cash flows. When a firm's own stock price drops significantly, the firm's customers are less likely to delay payment on invoices. In effect, customers are providing insurance to the firm. This insurance effect does not exist for private firms....