This paper provides evidence that supply-side factors significantly drive the high share of unbanked households. Using interstate branching deregulation in the U.S. after 1994 as an exogenous shock, the authors show that an increase in bank competition is associated with a large drop in the...

We study a credit market with adverse selection and moral hazard where sufficient sorting is impossible. The crucial novel feature is the competition between lenders in their choice of contracts offered. Qualities of investment projects are not observable by banks and investment decisions of...

We investigate, in a model of perfectly competitive banks and a lower bound on the deposit rate that these banks may offer, the idea that, as a result of financial innovation, capital adequacy requirements may become ineffective in preventing banks from investing in risky assets which are, from...

This paper studies a credit market with adverse selection and moral hazard where sufficient sorting is impossible. The crucial novel feature is the competition between lenders in their choice of contracts offered. The quality of investment projects is unobservable by banks and entrepreneurs’...

This paper examines (1) the change in commercial banks’ risk taking as states in the United States removed restrictions on bank branching within state borders and (2) the channels through which the removal of these restrictions affect bank risk taking. I find that, after the liberalization of...

We examine the coexistence of banks and financial markets, studying a credit market where the qualities of investment projects are not observable and the investment decisions of entrepreneurs are not contractible. Standard banks can alleviate moral-hazard problems by securing a portion of a...

The introduction of new digital production and distribution technologies may alter the firms' strategy sets, as they are not able to commit credibly to quantity strategies anymore. Mixed oligopoly markets may emerge where some companies compete in prices, while others adjust their quantities....

Electronic coordination may drastically reduce transport costs, especially for digital or digitalizable products where local markets may actually shrink to a point in space. In the present paper we use a model with differentiated products to analyze the impact of declining transport costs on...

Do firms have proper incentives to invest in electronic coordination? We discuss this question in an oligopoly model with a local firm and a distant competitor that may reduce transport costs by investing in electronic coordination. In a two-stage game with investment in the first stage and...

What is the appropriate degree of centralization in the context of industrial policy? The basic advantage of centralization results from internalization of external effects. While most of the literature stresses the superior information of regional authorities as a countervailing force, the...