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We present a new measure of legal protection of minority shareholders against expropriation by corporate insiders: the anti-self-dealing index. Assembled with the help of Lex Mundi law firms, the index is calculated for 72 countries based on legal rules prevailing in 2003, and focuses on private enforcement mechanisms, such as disclosure, approval, and litigation, governing a specific self-dealing transaction. This theoretically-grounded index predicts a variety of stock market outcomes, and generally works better than the commonly used index of anti-director rights.

Corporate Finance and Governance --- Government Policy and Regulation --- Business and Securities Law

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This paper examines the evolving importance of banks and securities markets during the process of economic development. As economies develop, they increase their demand for the services provided by securities markets relative to those provided by banks, such that securities markets become increasingly important for future economic development. Some exploratory evidence further suggests that deviations of a country's actual financial structure-the mixture of banks and markets operating in an economy-from the estimated optimal structure are associated with lower levels of economic activity.

International Finance --- General Financial Markets --- Financial Institutions and Services --- Financial Markets • Saving and Capital Investment • Corporate Finance and Governance

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Financial frictions have been identified as key factors affecting economic fluctuations and growth. But, can institutional reforms reduce financial frictions? Based on a canonical investment model, we consider two potential channels: (i) financial transaction costs at the firm level; and (ii) required return at the country level. We empirically investigate the effects of institutions on these financial frictions using a panel of 75,000 firm-years across 48 countries for the period 1990 - 2007. We find that improved corporate governance (e.g., less informational problems) and enhanced contractual enforcement reduce financial frictions, while stronger creditor rights (e.g., lower collateral constraints) are less important.

Finance: General --- Investments: Stocks --- Economic Theory --- Corporate Governance --- Corporate Finance and Governance: General --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Institutions and Growth --- Corporate Finance and Governance: Government Policy and Regulation --- Financial Economics --- General Financial Markets: General (includes Measurement and Data) --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Corporate governance --- role & responsibilities of boards & directors --- Economic theory & philosophy --- Finance --- Investment & securities --- Financial frictions --- Competition --- Commodity markets --- Stocks --- Economic sectors --- Economic theory --- Financial markets --- Financial institutions --- Economic forecasting --- Commodity exchanges --- United States --- Economic development --- Business cycles. --- Econometric models.

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We worked with two microlenders to test impacts of randomly assigned reminders for loan repayments in the "text messaging capital of the world". We do not find strong evidence that loss versus gain framing or messaging timing matter. Messages only robustly improve repayment when they include the loan officer's name. This effect holds for clients serviced by the loan officer previously but not for first-time borrowers. Taken together, the results highlight the potential and limits of communications technology for mitigating moral hazard, and suggest that personal obligation/reciprocity between borrowers and bank employees can be harnessed to help overcome market failures.

Firm Behavior: Theory --- Intertemporal Firm Choice, Investment, Capacity, and Financing --- Banks • Depository Institutions • Micro Finance Institutions • Mortgages --- Financial Markets • Saving and Capital Investment • Corporate Finance and Governance --- Formal and Informal Sectors • Shadow Economy • Institutional Arrangements

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The global financial crisis has left a large private sector debt overhang and high levels of non- performing loans (NPLs) in several European countries. Small and medium-size enterprises (SMEs) represent a significant and weak segment of the nonfinancial corporate sector. SMEs face a number of legal, financial, and regulatory challenges to restructuring that differ from those of larger corporates, such as a rigid and costly insolvency regime, a higher fixed cost to loan restructuring, and the lack of alternative sources of financing. Given SMEs’ large presence and close links to the banking system, addressing the SME loan problem in Europe will be critical for strengthening bank and corporate balance sheets and supporting a more robust and sustained recovery.

Banks and Banking --- Corporate Finance --- Finance: General --- Financial Risk Management --- Industries: Financial Services --- Corporation and Securities Law --- Bankruptcy --- Liquidation --- Corporate Finance and Governance: Government Policy and Regulation --- Corporate Finance and Governance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Debt --- Debt Management --- Sovereign Debt --- Finance --- Ownership & organization of enterprises --- Banking --- Small and medium enterprises --- Solvency --- Debt restructuring --- Nonperforming loans --- Economic sectors --- Financial sector policy and analysis --- Asset and liability management --- Financial institutions --- Loans --- Small business --- Debts, External --- Banks and banking --- Portugal