We study the relative strengths and weaknesses of principles based and rules based systems of regulation. In the principles based systems there is clarity about the regulatory objectives but the process of reverse-engineer these objectives into meaningful compliance at the firm level is...

Just as it may be optimal to regulate firms that produce negative externalities, it may be optimal to provide subsidy to firms that produce positive externalities. This paper studies the optimal provision of subsidy to maximize the value of these externalities, and also whether there are policy...

We study two issues: the relationship between loan monitoring and loan risk and the corporate value of banks' investments in loan monitoring systems. We find that dynamic monitoring of loans, where the bank is scanning in real time for events that may be of relevance to loan quality, tend to...