We model experimentally the governance of an institution. The optimal management of this institution depends on the information possessed by insiders. However, insiders, whose interests are not aligned with the interests of the institution, may choose to use their information to further personal...

In this paper we investigate the extent to which insurance companies utilize financial derivatives contracts in the management of risks. The data set we employ allows us to observe the universe of individual insurer transactions for a class of contracts, namely, those normally through of as...

This paper models, and experimentally simulates, the free-rider problem in a takeover when the raider has the option to "resolicit," that is, to make a new offer after an offer has been rejected. In theory, the option to resolicit, by lowering offer credibility, increases the dissipative losses...

In this paper we formulate and test a number of hypotheses regarding insurer participation and volume decisions in derivatives markets. Several specific hypotheses are supported by our analysis. We find evidence consistent with the idea that insurers are motivated to use financial derivatives to...

We study the effects of labor market rigidities and frictions on firm-size distributions and dynamics. We introduce a model of endogenous entrepreneurship, labor market frictions, and firm-size dynamics with many types of rigidities, such as hiring and firing costs, search frictions with vacancy...

The parameter loss given default (LGD) of loans plays a crucial role for risk-based decision making of banks including risk-adjusted pricing. Depending on the quality of the estimation of LGDs, banks can gain significant competitive advantage. For bank loans, the estimation is usually based on...

We study borrowers' preferences over bank and family loans based on field work undertaken in rural Rwanda. We randomly assigned willingness-to-pay questions for a hypothetical loan offer either by a bank or by a family member to a sample of 480 households. Informal family loans are typically...

Loan and bond finance during 1985-2005 can be divided into three sub-periods. After the 1982 debt crisis, which mainly involved domestic and foreign bank loans to both the corporate and government sectors, there was practically no credit. This situation of lack of credit persisted until the...

The impact of the business cycle on banks' internally generated cash flow is an important driver in the pro-cyclical dynamics of the traditional banking business and yet the issue has been understated in the discussion on counter-cyclical regulations. Considerable attention has been given to the...

Small and medium enterprises (SMEs) represent a large percentage of the corporate tissue of developed countries, but they do not have adequate attention. In fact, various researchers have focused their studies on larger and well-known companies. This paper aims to investigate the impact of...