This paper develops a model of private debt financing under inefficient financial intermediation. It suggests a mechanism that can generate the following sequence of events observed in the recent Asian crisis: A period of relatively low capital flow despite a steady improvement in economic...

This paper uses a stylized model of financial intermediation to characterize the exact circumstances along various paths of economic growth, financial development, and liberalization that can trigger a financial crisis. It shows how to avoid financial crises through proper sequencing of various...

In the context of a stylized model of financial intermediation, this paper characterizes the circumstances along the paths of financial development, financial liberalization and economic growth that can trigger a financial crisis. It shows how to avoid financial crises through the proper...

The paper develops a new model of private debt financing with an inefficient financial system at its core, where inefficiency is characterized by costly loan monitoring. The model suggests a mechanism that generates the following series of events: a period of low capital inflow despite high...

This paper develops a model of private debt financing under inefficient financial intermediation. It suggests a mechanism that can generate the following sequence of events observed in the recent Asian crisis: A period of relatively low capital flow despite a steady improvement in economic...