We observe less efficient capital allocation in countries whose banking systems are more thoroughly controlled by tycoons or families. The magnitude of this effect is similar to that of state control over banking. Unlike state control, tycoon or family control also correlates with slower...

We find lending by state controlled banks to be significantly more associated with monetary policy than is lending by private sector banks. At the country-level, we further find monetary policy to be significantly closely linked to aggregate loan growth and aggregate fixed capital investment...

We analyze optimal financial contracts when the specificity of investments is endogenous. Specialization decreases the liquidation value of assets, but improves the asset's long-term productivity. While the former is known to make financing more difficult, we show that the latter can ease...