The authors develop a model in which governmental subsidies to banks produce greater benefits for banks than they cost the taxpayers. In exchange, the government dictates private-sector credit allocation to produce political benefits that exceed the cost of subsidies. As long as banks' losses...

We perform a comprehensive test of order choice theory from a sample period when the NYSE trades in decimals and allows automatic executions. We analyze the decision to submit or cancel an order or to take no action. For submitted orders we distinguish order type (market vs. limit), order side...

Theory suggests that reputations, developed in repeated face-to-face interactions, allow nonanonymous, floor-based trading venues to attenuate adverse selection in the trading process. We identify instances when stocks listed on the New York Stock Exchange (NYSE) experience a non-trivial...