This paper tackles the issue of unverifiable quality of after-sales insurance services, such as a prompt reimbursement of damages. A dynamic model is introduced in order to allow reputation to emerge as a means of disciplining insurance firms to deliver high quality. The equilibrium of a...

We collect data from three Italian microcredit institutions, MAG2, MAG4 and MAG6, which operate in Milan, Turin and Reggio Emilia respectively, by targeting two categories of wealthless borrowers: single entrepreneurs and organizations (cooperatives and associations). Evidence shows that...

Using a longitudinal data set of balance sheets of 504 nonprofit and for-profit firms operating in the social residential sector in Italy, we investigate the relation between capital structure and type of enterprise. The nondistribution constraint typical of nonprofit organizations rises the...

In this paper we propose a moral hazard model to illustrate a credit crunch scenario. A firm is denied the access to bank funding due to high informational or monitoring costs that the bank must pay to induce the firm to behave. This is likely to happen in periods of recession, when trust...

In this paper we apply a real-option model to study how tax rate uncertainty affects a firm's decisions about both the timing and the source of finance of an investment project. We show that debt finance (i) encourages entry and (ii) mitigates the e¤ect of tax rate uncertainty on entry timing.

Does management consulting facilitate the access to credit for start-ups? This paper tries to answer the question by developing a theoretical framework where a firm applies for a bank loan to implement a risky project. The probability of success increases if the firm exerts a costly managerial...

In this paper we consider a moral hazard problem between a creditworthy firm which needs funding and a bank. We first study under which conditions the firm does not obtain the loan. We then determine whether and how the intervention of an external financial institution can facilitate the access...

How do wage and other financial benefits affect the set of candidates for political office? In this theoretical paper, we answer the question by studying self-selection into politics of individuals with heterogeneous skills and heterogeneous motivations. Our predictions are in line with the...