We model an economy in which domestic banks and firms face incentive constraints, as in Holmstrom and Tirole (1997). Firms borrow from banks and uninformed investors, and can collude with banks to reduce the intensity of monitoring. We study the general equilibrium effects of capital flows...

Intro -- Contents -- Acknowledgments -- 1. Introduction -- 2. Borrowers, Investors, and National Institutions -- 3. Domestic Policy, State Institutions, and Financial Globalization -- 4. Global Capital Markets and the Command Economies -- 5. Sinking or Swimming in a Global Capital Pool -- 6....