— The dynamic rural nonfarm sector in China has been a major contributor to the country’s remarkable growth, while in India the growth in output and employment in this sector has been rather stagnant. This paper argues that the observed patterns in the rural nonfarm development are the results of institutional differences between the two countries, especially in their political systems, ownersh...

Using panel data collected in 2005, we evaluate how bank size, discretion over credit, incentive schemes, competition, and the institutional environment affect lending to small- and medium-sized enterprises in China. We deal with the endogeneity problem using instrumental variables, and a reduced-form approach is also applied to allow for weak instruments in estimation. We find that total bank ...

Th is paper analyses the nature and causes of the patterns of inequality and poverty in India. Since the economic liberalization in the early 1990s, the evidence suggests increasing inequality (in both spatial and vertical terms) as well as persistent poverty. Th e macroeconomic policies possibly responsible for these trends include—fi scal tightening, regressive tax policies and expenditure cu...

Much has been written about institutional differences between European and North American labor markets, and about their role in determining the large and persistent differences between the unemployment rates in Europe and US over the last fifteen-twenty years. The objective of this paper is to answer the question: why have these differences in labor market flexibility emerged and why do they p...

This study examines dealer behavior in a sample of 14,749 corporate bonds that vary in credit rating and liquidity. Our unique data set allows us to identify purchases and sales by individual dealers, enabling us to determine how long a dealer holds a bond purchase in inventory and how much of that initial purchase the dealer sold to customers, and the spread on those sales to customers, and ho...

Financial institutions are financed by both investors and customers. Investors expect an appropriate risk-adjusted return for providing financing and risk bearing. Customers, in contrast, provide financing in exchange for specific services, and want the service fulfillment to be free of the intermediary’s credit risk. We develop a framework that defines the roles of customers and investors in i...

Micro-enterprise credit programs are coming to be seen as an important innovation in economic development both in developing countries and, more recently, in the United States. The Grameen Bank in Bangladesh has been operating a decentralized village credit program since 1976 which has achieved impressive results making non-collateralized loans to the rural poor. Currently, a handful of organiz...

This paper evaluates village-level micro nance institutions in rural and semi-urban Thailand using data from a large strati ed, clustered cross-sectional survey. As is typically the case, micronance institutions have emerged in Thailand without the bene t of experimental controls. Thus, the data has neither randomized participation nor program placement. In addition, we do not study a pre-speci...