This paper examines the development processes of a country when the degree of verifiability is endogenously determined. We assume that labor input into the enforcement sector is necessary for improving the degree of verifiability. The main result is that although efforts to improve verifiability...

In this paper we present a series of models, all within the context of a simple two-good economy, which bring out the distinctions between the different types of money and financial institutions. The models emphasize the physical properties of the economic goods, moneys, and trading systems. In...

We analyze a dynamic moral hazard setting, in which agents can borrow and lend and their decisions about effort, consumption and savings are private information. In contrast with previous findings, we show that as long as agents do not have perfect control over publicly observable outcomes, the...

In this paper we present a series of models, all within the context of a simple two-good economy, which bring out the distinctions between the different types of money and financial institutions. The models emphasize the physical properties of the economic goods, moneys, and trading systems....

Developed economies are usually characterised by high levels of governance and observance of the rule of law, with their macroeconomic outcomes being largely unaffected by corruption. In middle and low-income countries, however, corruption often has discernible negative consequences to the...

During the last decades there has been a widespread relaxation of legal entry barriers into the banking industry, with potential benefits for financial integration and competition. Obstacles to banks' geographical and business expansion have been removed and branching has been substantially...

This paper endeavours to shed light on the respective roles of the formal and the informal credit markets in developing countries. We use survey data for manufacturing firms in Cote de Ivoire, documenting their access to informal credit markets, their investments, and their financing. We...

The paper provides a realistic explanation for the persistently large loan costs in the informal and formal credit markets of South Asia. In the presence of the adverse selection problems that arise from information asymmetries and discrepancies in credit services, price competition in somewhat...

An overlapping-generations model where agents choose whether to become educated when young is presented. Education enhances productivity, but needs to be financed by borrowing. Because of the possibility of default, lenders may ration credit. We characterize the steady-state equilibrium with and...

This study investigates how companies adjusted their investments in key strategic resources -- i.e., their workforce, capital expenditures, R&D, and CSR -- in response to the sharp increase in the cost of credit (the "credit crunch") during the financial crisis of 2007-2009. We compare companies...