We examine the connection between discrete-time models of financial markets and the celebrated Black--Scholes--Merton (BSM) continuous-time model in which ''markets are complete." Suppose that (a) the probability law of a sequence of discrete-time models converges to the law of the BSM model and...

We present a dynamic contracting model in which the principal and the agent disagree about the resolution of uncertainty, and we illustrate the contract design in an application with Bayesian learning. The disagreement creates gains from trade that the principal realizes by transferring payment...

Berle and Means's analysis of the corporation - in particular, their view that those in control are not the owners of the corporation - raises questions about actions that corporations take to counter concerns regarding management's influence. What mechanisms, if any, do corporations implement...

Berle and Means's analysis of the corporation - in particular, their view that those in control are not the owners of the corporation - raises questions about actions that corporations take to counter concerns regarding management's influence. What mechanisms, if any, do corporations implement...

Productivity is the main factor holding back long-term economic growth in Italy. Since the second half of the 1990s, productivity growth has been feeble both by historical standards and compared with the other main euro area countries. Understanding the reasons for such a performance and finding...

We present a dynamic contracting model in which the principal and agent disagree about the resolution of uncertainty, and we illustrate the contract design in an application with Bayesian learning. The disagreement creates gains from trade that the principal realizes by transferring payment to...

The relationship between banks' capitalizations and risk-taking behaviors has been one of the central issues in the banking literature because of its implications on regulatory policies. Despite the fact that a considerable amount of studies have been conducted concerning the issue, neither...

We investigate the relationship between banks' capitalization and risk-taking behavior. The conventional wisdom is that well-capitalized banks are less inclined to increase asset risk, because the option value of deposit insurance decreases with capitalization. There are, however, at least three...

This paper provides a theoretical framework to investigate the relationship between banks' capitalization and risk-taking behavior. The conventional wisdom is that relatively well-capitalized banks are less inclined to increase asset risk, because the option value of deposit insurance decreases...