KfW has been assigned responsibility by the German government and several other donors for projects designed to reconstruct the financial landscapes of Southeast Europe. These activities are recognized as quite successful in building sustainable financial institutions that serve the small end of...

"We analyze government interventions to alleviate debt overhang among banks. Interventions generate two types of rents. Informational rents arise from opportunistic participation based on private information while macroeconomic rents arise from free riding. Minimizing informational rents is a...