This paper studies the interaction between corporate hedging and liquidity policies. We present a theoretical model that shows how corporate hedging facilitates greater reliance on cost-effective, externally-provided liquidity in lieu of internal resources. We test the model's predictions by...

Using novel data on bank applications to the Troubled Asset Relief Program (TARP), we study the effect of government assistance on bank risk taking. Bailed-out banks initiate riskier loans and shift assets toward riskier securities after government support. However, this shift in risk occurs...

The empirical distribution of firms' market capitalizations is shown to be in excellent agreement with a very skewed lognormal distribution: the largest firms are about 1000 times larger than the median firm. Can this skewed size distribution be consistent with mean-variance portfolio...

Using a unique setting in China, where the geographic distance between Collective firms and local governments is highly persistent due to legal restrictions on land ownership and mobility, we investigate the role of government involvement in small firms. In the analysis of survey responses, we...