Capital Flows with Debt- and Equity-Financed Investment-Equilibrium Structure and Efficiency Implications »
Series: IMF Working Papers
Author(s): Assaf Razin , Chi-Wa Yuen , and Efraim Sadka
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 November 1998
Keywords: debt and equity, efficient capital flows, asymmetric information, corrective policy, equity market, capital flows, equity finance, stock of capital, capital market
This paper distinguishes between debt and equity flows in the presence of information asymmetry between the firm’s “insiders” and “outsiders” in a small open economy. It shows the...