Martin, Alberto; Taddei, Filippo - Collegio Carlo Alberto, Università degli Studi di Torino - 2010
The financial crisis of 2007-08 has underscored the importance of adverse selection in financial markets. This friction … adverse selection. Our main results are that, by fostering unproductive investment, adverse selection: (i) leads to an … conclude that both frictions complement one another and argue that limited pledgeability exacerbates the effects of adverse …