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associated with an increase in the allocation of portfolio equity and banking investment to that country. However, it does not … show significant effects on the allocation of foreign direct investment and portfolio debt. Our findings are not driven by …
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Banks produce short-term debt for transactions and storing value. The value of bank money must not vary over time so agents can easily trade this debt at par. This requires that no agent finds it profitable to produce costly private information about the bank's loans. To produce safe liquidity...
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, reducing the efficiency of trade. This need for opacity conflicts with the production of information about investment projects …
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