We study the effects of investor protection on the cost of external finance, entrepreneurship, and creation of new firms in an equilibrium search model of private capital markets. Besides search frictions, we emphasize moral hazard problems that stem from entrepreneurs' possibilities to...

We study the effects of investor protection on the availability of external finance, entrepreneurship, and creation of new firms in an equilibrium search model of private capital markets. In addition to search frictions, we examine contract frictions, specifically interim and ex post moral...

The banking system is known to be vulnerable to self-fulfilling crises that are caused by depositors' co-ordination failure. We show that transparency regulation may prevent certain types of systemic crisis by eliminating the possibility of coordination failure. Copyright Banca Monte dei Paschi...