Currency carry trades–buying high-deposit-rate currencies and selling low-deposit-rate currencies–earn positive excess returns over time. The literature has heretofore explained this phenomenon based on currency differences. We examine the possibility that the bank default risk of...

We examine the efficiency of the internal capital market under three alternative ownership structures -- the dispersed ownership, the concentrated ownership and the Controlling-Minority-Shareholder (CMS) structure. Although the highest efficiency is achieved under the concentrated ownership, our...

We present a simple analytical framework that illustrates the impact of two types of market liberalization on stock prices: cold turkey versus gradual liberalization. Using this theoretical framework, we show that gradual stock market liberalization can have a negative impact on stock prices...