Cyber-attacks on financial institutions and financial market infrastructures are becomingmore common and more sophisticated. Risk awareness has been increasing, firms activelymanage cyber risk and invest in cybersecurity, and to some extent transfer and pool theirrisks through cyber liability...

U.S. business investment has taken a serious toll during the global financial crisis and also in the recovery phase investment did not pick up as expected. What is surprising is that the alleged investment slowdown happened at a time of record corporate profits and retained earnings, highly...

A series of lecture on the theory of microfinance. Using contract theoretic models, the lecture summaries the current research in the microfinance. The lecture cover consumption credit, adverse selection, moral hazard and contract enforcement

This case-study examines the group lending mechanism of a particular Microfinance Institution working in Haryana, India. The Microfinance Institution restricted the number of group members that could borrow simultaneously from it and allowed the internal lending amongst the group members. We...

Consumers regularly seek professional advice when purchasing financial products. It is often argued that advisers should solely be compensated by consumers, as then, an adviser has no incentive to give biased advice. In our theoretical model, we show, that a fee-for-advice remuneration system...

Collateral is considered a mechanism that mitigates adverse selection and credit rationing in credit markets, as well as other inefficiencies that arise when borrowers hold ex-ante private information. It is currently of interest to analyze the determinants of providing collateral, and to...

This paper develops and compares two theories of strategic behavior of professional forecasters. The first theory posits that forecasters compete in a forecasting contest with pre-specified rules. In equilibrium of a winner-take-all contest, forecasts are excessively differentiated. According to...

In the context of a costly-state-verification model with a risk-neutral agent having limited liability, it has been postulated that allowing stochastic auditing reduces the asymmetric information problem to a trivial one: i.e., the first best can be approached arbitrarily closely with feasible...

This paper studies equilibria for economies characterized by moral hazard (hidden action), in which the set of contracts marketed in equilibrium is determined by the interaction of financial intermediaries. The crucial aspect of the environment that we study is that intermediaries are restricted...

Confirmation of the settlement on-[block]chain transactions is both costly and takes time as it requires the actions of others (i.e., “bitcoin miners”) who compete to mine a block into which they can compile transactions. In the on-chain settlement competition for bitcoin transactions, users...