We derive the optimal crowdfunding contract of a financially constrained monopolist and analyze its implications for production, investment and welfare. Crowdfunding contracts may serve as a price-discrimination mechanism, forcing pivotal consumers to pay a premium above the future spot price, thus increasing profits. When raising funds is costly, entrepreneurs balance the benefits from price d...

This study investigates the effect of banks’ dual holding on bank lending and firms’ investment decisions using a sample of listed firms in China. We find that dual holding leads to easier access to bank loans, a result that is more pronounced for non-state-owned enterprises (non-SOEs) than SOEs. We also find that dual holding distorts banks’ lending decisions and harms the investment efficienc...

Executive summary. Since the advent of indexing as an investment strategy, there has been a robust debate over the merits of actively and passively managed funds. As a result, at various times throughout the year, an investor is likely to hear that some percentage of actively managed funds have outperformed the stock market over a given period of time.1 If during the period a majority of active...

We examine the role of hedge funds as primary lenders to corporate firms. We investigate both the reasons and the implications of hedge funds’ activities in the primary loan market. We examine the characteristics of firms that borrow from hedge funds and find that borrowers are primarily firms with lower profitability, lesser credit quality, and higher asymmetric information. Our results sugges...

Peer-to-Peer (P2P) lending provides online users an innovative loaning and investment vehicle without the intermediation of financial institutions. However, the research on online P2P lending is still scarce. In this study we review relevant literature and conduct a comparative study of online P2P lending practices in the USA and China. We find that two categories of credit information, “hard” ...

This paper examines the effects of costly external financing on the optimal timing of a firm’s investment. By altering the optimal investment timing, costly financing affects current investment and the sensitivity of investment to internal cash flow. Importantly, the relation between the cost of external funds and investment-cash flow sensitivity is non-monotonic. Investment-cash flow sensitivi...