Corporate disclosure policies, by promoting greater transparency, foster external scrutiny and thus activity in the market for corporate control. A firm's relative reliance on takeovers versus internal board monitoring is therefore itself an aspect of its governance arrangements. However, agency...

This paper explores a firm's reliance on internal and external governance mechanisms, recognizing that the choice of one instrument relative to the other is itself part of the governance policy of the firm. Starting from the premise that firms' disclosure policies can foster external scrutiny...

We investigate the interaction between banks' use of information acquisition as a strategic tool and their role in promoting the efficiency of credit markets when a bank's ability to gather information varies with its distance to the borrower. We show that banks acquire proprietary information...

We study the economic forces that drive innovation in credit-risk assessment and the role of regulators in fostering technological progress. Recent regulatory proposals base capital-adequacy standards on banks' own internal systems and call for regulators to establish a set of best practices for...

This paper analyzes the impact of two dimensions of technological progress on competition in financial services. On the one hand, better information technology may result in improved information processing; on the other, it might also lead to low cost or even free access to information through,...

This paper analyzes the impact of an information technology revolution on credit markets. We focus on two aspects of technological progress. On the one hand, better information technology may result in improved information processing; on the other, it might also lead to low cost or even free...

This paper analyzes the impact of two dimensions of technological progress on competition in financial services. On the one hand, better information technology may result in improved information processing; on the other, it might also lead to low cost or even free access to information through,...

While competition constrains the ability of banks to extract informational rents from lending relationships, their informational monopoly curtails competition through the threat of adverse selection. These opposing forces also shape banks' incentives to invest in relationship lending expertise....

Using a unique data set of loan applications by small businesses, we study the determinants of loan transactions focusing on the respective roles of private information and borrower proximity. Although credit availability and the offered loan rate decrease in the bank-borrower distance and...

The advent of online lending offers the opportunity to clearly identify transactional and relationship debt in terms of the firm's chosen mode of interaction with the bank. Using a unique data set of comparable online and in-person loan transactions, we study the determinants of arm's-length and...