Over the last decade interest in the role of finance in economic growth has revived. Building from the pioneering work of Goldsmith (1965) and the insights of Shaw (1973) and McKinnon (1973), the more recent work examines the role of financial institutions and financial markets in corporate...

What distinguished financial institutions from other firms is the relatively small share of real assets on their balance sheets. Thus, the direct impact of financial institutions on the real economy is relatively minor. The indirect impact of financial markets and institutions on economic...

Derivatives have become an essential instrument for hedging risks, yet moral hazard can lead to their misuse by problem banks. Given that the absence of comprehensive data on bank derivatives activities prevents an accurate assessment of bank risk-taking, banks have an opportunity to take...

Do checking accounts help banks monitor borrowers? A borrower’s checking account provides a bank with exclusive access to a continuous stream of borrower data, namely, the borrower’s checking account balances at the bank. Using a unique set of data that includes monthly and annual...

Infrastructure requirements have long played an important role in the development debate. Until recently these requirements referred to the need for improvements in roads, railways, electricity supply, telecommunications and the like. Lack of such infrastructure was seen as an important cause of...

We provide evidence that firms attach call options to debt issues to manage interest rate risk. We show, using extensive time series data on these hedging transactions, that the hedging decision is explained remarkably well by theories of hedging demand, such as the bankruptcy and...

The aim of this paper is to develop a framework for modeling conditional loss distributions through the introduction of risk factor dynamics. Asset value changes of a credit portfolio are linked to a dynamic global macroeconometric model, allowing macro effects to be isolated from idiosyncratic...

When firms go public in an IPO, they must choose a number of shares to offer and a price level for those shares. Given an estimated total value, this division would seem to have little economic significance. Casual empiricism and the evidence from stock splits, however, suggest that firms do not...

This study develops a theoretical explanation for the existence of positive, as well as negative, experience spillovers across corporate development activities. We suggest that the similarity in two activities influences both the sign and magnitude of experience spillovers. The argument is used...