Ongoing financial innovation and greater information availability increase the tradability of bank assets and reduce banks' dependence on individual bank managers as private information in the lending process declines. In this paper we argue that this has two effects on banks, with opposing...

Ongoing financial innovation and greater information availability increase the tradability of bank assets and reduce banks' dependence on individual bank managers as private information in the lending process declines. In this paper we argue that this has two effects on banks, with opposing...

The degree to which stock markets can perform theirrole of allocating resources efficiently in the presence of moral hazard isinvestigated. First, an existing framework is extended in order to define stockmarket equilibrium in such a way that allows for a dispersed initial ownershipdistribution...