We investigate a market in which experts have a moral hazard problem because they need to invest in costly but unobservable effort to identify consumer problems. Experts have either high or low qualification and can invest either high or low effort in their diagnosis. High skilled experts are...

We find that competition from payday lenders leads depository institutions to raise overdraft fees and reduce the availability of “free” checking accounts. We attribute this rise in prices partly to adverse selection created by banks’ practice of charging a flat fee regardless of the...

This paper examines international differences in banks' capital structure adjustments across a large panel of 94 countries over the period 1993 to 2007. A bank's ability to adjust its capital ratio is influenced by corporate governance, public policy, market structure, and bank regulatory...

The emergence of new trading platforms has intensified order fragmentation. Yet, little is known on how this phenomenon affects the behavior of profit maximizing exchanges. I show that fragmentation may allow competing exchanges to retain market power. When order splitting is beneficial for...

The emergence of new trading platforms has intensified order fragmentation. Yet, little is known on how this phenomenon affects the behavior of profit maximizing exchanges. I show that fragmentation may allow competing exchanges to retain market power. When order splitting is beneficial for...

We study a model in which firms compete preemptively for trading opportunities and risk management introduces latency in trading. As the time pressure faced by firms is endogenous to risk management choices, strategic complementarities can trigger a “race to the bottom” where prioritizing...

I study how sequential entry into an arbitrage affects the liquidity of underlying assets and the speed of arbitrage. Incumbent arbitrageurs exploit a mispricing between two identical but imperfectly liquid assets. Because of market thinness, incumbent arbitrageurs trade slowly to limit their...

Despite extensive evidence of how mutual fund competition affects fund fee and performance outcomes, there is little evidence of how competition affects the incentives of market participants. This paper uses an international sample of active equity mutual funds to examine how product development...

We empirically analyze the competition between a relationship lender and a transaction lender in the credit business with micro and small entrepreneurs. Drawing on a data set about the customers of the relationship lender ProCredit Ecuador combined with data about all other loans of these...