intensifies. We find that the better the institutions and the more competitive the banking sector, the higher the bank’s incentive …

substitute some functions of missing institutions, for example, enforcing contracts. In a two period model, there is no contract …

positions. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more … voters become part of the corrupt system. Well-functioning financial institutions, in turn, can increase the political …

The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank … institutions must improve significantly in order to yield a stable equilibrium in which the optimal number of firms is liquidated …. However, in a particular range, improving institutions may even decrease the number of bad firms liquidated. …