This paper examines an ex-post rationale for the patenting of scientific discoveries. In this model, scientists do not know which firms can make use of their discoveries, and firms do not know which scientific discoveries might be useful to them. To bridge this gap, either or both sides need to...

This paper examines bank behavior in venture capital. It considers the relationship between a bank's venture capital investments and its subsequent lending, which can be thought of as intertemporal cross-selling. Theory suggests that unlike independent venture capital firms, banks may be...

This paper surveys the main policy debates on financial sector development. It provides a framework for understanding the main functions of the financial system, emphasizing informational problems and their efficient resolution through accumulation of reputational capital and the development of...

This paper provides a new explanation for the use of convertible preferred equity in venture capital. It explains that the key feature of the convertible security is to create different cash flow rights for acquisitions and IPOs. It shows how the convertible security implements an optimal...

Venture capital is widely believed to be an influential arrangement for the financing of new innovative companies. We examine and find empirical evidence that venture capital financing is related to product market strategies and outcomes of startups. We use a unique hand-collected database of...