Using the passage of the Sarbanes-Oxley Act and the associated change in listing standards as a natural experiment, we find that while board independence decreases the cost of debt when credit conditions are strong or leverage low, it increases the cost of debt when credit conditions are poor or leverage high. We also document that independent directors set corporate policies that increase firm...

We study an overlapping generations version of the principal-agent problem, where incentive contracts are determined in general equilibrium. All individuals are workers when young, but have a choice between becoming entrepreneurs or remaining workers when old. Imperfections in the credit market give rise to rents in entrepreneurial activities involving capital. These rents motivate poor young a...

This paper models a developing nation that faces a foreign exchange shortage and hence its demand for foreign goods is limited both by its income and its foreign exchange balance. Availability of international credit relaxes the second constraint. It is shown that in this setting the availability of intemational credit at concessionary rates can leave the borrowing nation worse off than if it h...

This paper explores empirical linkages between credit unions’ (CUs’) policies and their financial perfomance, as measured by loan delinquency and profitability, using a unique micro dataset of credit unions in three Latin American countries. The estimated translog profit function is generalized using a slack variable concept that parameterizes any systematic deviation from profitmaximizing beha...

this paper proposes a HMM (Hidden Markov Model) based fraud detection system for credit card fraud detection. The method works on the statistical behavior of user’s transactions. Since the original transactions are not available due to privacy policies of bank we used here synthetically generated data for a credit card user, and then HMM model is trained using different size of sample of genera...

I explore alternative central bank policies for liquidity provision in a model of payments. I use a mechanism design approach so that agents’ incentives to default are explicit and contingent on the credit policy designed. In the first policy, the central bank invests in costly enforcement and charges an interest rate to recover costs. I show that the second-best solution is not distortionary. ...

This paper develops a theory of inequality and the social contract aiming to explain how countries with similar economic and political “fundamentals” can sustain such different systems of social insurance, fiscal redistribution, and education finance as those of the United States and Western Europe. With imperfect credit and insurance markets some redistributive policies can improve ex ante wel...

Recently, market globalization and competition have forced companies to find alternative means to boost sales and revenue. The use of the cash flow is increasingly becoming a viable alternative for managers to improve their company’s profitability in a supply chain. In today’s business transactions, a supplier usually asks a manufacturer to pay via the advance-cash-credit (ACC) payment scheme i...