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We establish that a monopoly bank never uses collateral as a screening device. A pooling equilibrium always exists in … lending in the sense that some socially productive firms are denied credit due to excessively high interest rate. …
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This survey reviews the literature on the political economy of financial structure, broadly defined to include the size of capital markets and banking systems as well as the distribution of access to external finance across firms.The theoretical literature on the institutional basis for...
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