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...

Transparency regulation aims at reducing financial fragility by strengthening market discipline. There are however two elementary properties of banking that may render such regulation inefficient at best and detrimental at worst. First, an extensive financial safety net may eliminate the...

We aim at explaining why some consumers use only one medium when paying for their point-of-sale transactions, while others multihome and use many. Using data on young Finnish consumers, we find that one key determinant of multihoming behavior in the market for payment media is consumer...

Although it is widely acknowledged that the benefits of corporate governance reform could be substantial, systematic evidence on such reforms is scant. We both document and evaluate a contemporary corporate governance reform by constructing 18 measures of shareholder and creditor protection for...

Banking system is known to be vulnerable to self-fulfilling crises that are caused by depositors’ coordination failure. We show that transparency regulation may prevent systemic crises by eliminating the possibility of the coordination failure. In principle, transparency regulation in our...

It is commonly thought that an open economy can accommodate output shocks through either exchange rate or real sector adjustments. We formalise this notion by incorporating labour market rigidities into an “escape clause” model of currency crises. We show that the absence of structural...

For many reasons, payment systems are subject to strong network effects; one of those is the necessity of interoperability among participants. This is often accomplished via standard-setting organizations. The goal of the Single European Payments Area (SEPA) is to establish modern cross-boarder...

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...