We analyze the interaction between bank and market finance in a model where bankers gather information through monitoring and screening. We show that, if a market is established characterized by a disclosure law such that entrepreneurs wishing to raise market-finance can credibly disclose their...

Using conditional quantile regression methods, we test for the existence of a non-linearity in the determinants of capital structure. We show that the size of the firm has a positive impact on the debt-equity ratio for low leverage firms and a negative impact for high leverage firms. Asset...

We study a competitive economy where entrepreneurs seek financing to produce capital goods that serve as inputs for final good production. Due to informational imperfections, choice of investment project and monitoring activity by financial investors are both non-contractible. Such...

We model a labor market in which workers’ level of education might be a signal of skills. We show that whenever the wage premium for education increases over time – as it might happen under skill biased technological progress – the investment in education needed to sustain a separating...