All things equal, interest rates should increase with the borrower's risk. And yet, Klapper, Laeven and Rajan (2012) cannot find such a positive relation in a broad sample of trade credit contracts. We shed some light on this puzzle by arguing that competition between informed and uninformed...

We study the causes and consequences of patronage in Brazilian cities since the country’s re-democratization. Local winning political coalitions increase their shares of civil servant workers and wages by 3-4 percentage points during a mayoral term, independent of their ideology. Over five...