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Seek to compare the consequences of single‐source versus multiple‐source lending for a borrower who has loans that can be prematurely terminated.

The considered model framework is an option‐theoretic firm value model similar to Merton (1974) but where lenders have the additional right to prematurely terminate the loans. The single lender is a monopolist, while multiple lenders are represented by a continuum without individual impact on the aggregate termination decision.

The model explains that, if the borrower is in financial distress but has positive net present value projects, a single lender has a higher incentive to save the firm and therefore terminates fewer loans than multiple lenders. In the opposite case where the firm is not under financial distress, it is the other way round and multiple lenders terminate fewer loans than a single lender. As a result, equity holders are better off by having a loan from a single‐source under financial distress but multiple‐source lending is advantageous in the absence of financial distress.

To focus on the origin for arising differences from single‐source and multiple‐source lending, consideration is given to the simple case with perfect information and without monitoring and renegotiation. These market imperfections can be incorporated into the model in a straightforward way.

While other models in the literature require market imperfections to explain the relevance of the bank relationship, this paper indicates that even in the absence of market imperfections the lending relationship is fundamental as long as lenders have the right for early terminations.

The study aims to investigate the effect of cultural alignment and value congruency between children and founder on intergenerational succession and on the observation of family optimal outcomes.

A game-theoretical approach is used to develop a sequential game modeling the strategic interactions behind successor selection. The authors test its main predictions by conducting an experiment with 75 subjects.

A theoretical prediction that misalignment between children and founder leads to outcomes without intergenerational succession, or to outcomes with intergenerational succession that are not family optimal. These predictions are buttressed by our experiment, which also found evidence that the family optimal outcome is focal when there are multiple equilibria.

No light is thrown on the sources of cultural (mis)alignment, but only on some of its consequences. Further studies of a different nature are needed to better understand the former.

Cultural diffusion and value congruency within the family should be timely fostered to promote harmony during the succession process and raise the chances of successful succession.

The cultural alignment and value congruency between incumbent and successors is treated as shaping the incentives that both types of agents face in the successor-selection process. Further, experimental techniques have not been used to test the results obtained in games exploring issues in family firm succession. This paper aims to begin filling this gap.

Using recent literature, examines developments in seven macroeconomic schools of thought: orthodox Keynesian, monetarist, new classical, real business cycle theory, new Keynesian, Austrian and post‐Keynesian. Describes all of these and classifies them as orthodox, new or radical. After setting out the differences, discusses the degree of agreement between the schools of thought. Concludes that macroeconomics is constantly evolving, resulting in new disagreements requiring a new consensus.

The purpose of this paper is to test whether underpricing can serve as a signal of quality in a financing-investment environment and to compare it under the two institutions for financing offers that are commonly observed in corporate financial markets: take-it-or-leave-it offer (TLO) and the competitive bidding offer (CBO).

The research paper uses experimental economics methodology and laboratory experiments to investigate the research question.

The results suggest that underpricing can serve as a signal of quality but not sustainable as a repeat strategy. Over time, the high-quality firms converge to a pooling strategy rather than bearing the cost of signaling. Additionally, underpricing is lower under CBO than under TLO institution due to competitive bidding. Signaling under CBO institution may be less salient due to possible mimicking by the low-quality firms.

This paper presents a first experimental investigation of the underpricing-signaling hypothesis in a financing-investment environment under asymmetric information. The choice of institution in a financing environment produces qualitatively and strategically different behavior among firms and investors.

This paper examines the effects of money financing of deficits on capital accumulation and growth in a framework where inflationary finance is determined endogenously through a dynamic game between an optimising central bank which attempts to minimise the inflation‐tax and a rational private sector, and this in turn determines the long‐run growth rate of the economy. We use dynamic programming to derive the time‐consistent equilibrium, which has intuitive properties. Our results indicate clearly that the inflation tax and the long‐run growth rate are negatively related.

The purpose of this paper is to develop a political economy model for a less developed region where a significantly large number of people belonging to the informal sector depend on political favours for their survival due to ill‐defined property rights. The purpose is to show that in such a scenario, democracy and political competition might lead to economic stagnation.

The arguments in the paper are represented in terms of a theoretical model.

The central result is that the party with a better political organization will have the incentive to maximize the size of the informal sector, which will also maximize its probability of winning. In equilibrium this party choosing anti‐development policies will have a higher probability to be in power. Thus universal franchise may lead to inefficiencies in such economies. These inefficiencies stem from ill‐defined property rights in the informal sector.

This paper is an original contribution to the class of political economy models of less developed countries.

This study aims to focus on the effects of economic globalisation programme on the problems of criminal activities and on the degree of skilled–unskilled wage inequality.

A competitive general equilibrium model of a small open economy is developed. Unskilled labour moves from the production sector to the criminal sector. Those who join the criminal sector snatch a part of capitalists’ income and skilled workers’ income to finance their consumption and face positive probability of being caught and punished. The size of the criminal sector and the rental rate on capital are simultaneously determined in the short-run equilibrium of this model where factor endowments are exogenously given at a particular point of time.

An increase in the capital endowment resulting from an exogenous foreign capital inflow raises demand for labour and wage rates in both the sectors. So, it lowers the rental rate on capital and thus aggravates the problem of skilled–unskilled wage inequality because the skilled labour using sector is more capital intensive than the other production sector. However, it may lower the size of the criminal sector and thus may raise the level of the gross domestic product.

There exists substantial theoretical works on the problem of skilled–unskilled wage inequality, but none of these works focuses on the general equilibrium allocation of unskilled labour to the criminal sector. On the other hand, existing models specialised to analyse theoretical implications of crime and punishment do not focus on the interaction between crime and wage inequality.

In recent years, the financial system has been changing rapidly. At the same time, macroeconomic volatility has fallen in developed countries. The purpose of this paper is to examine how these developments may have affected the nature of systemic crises. The paper also aims to discuss how central banks and other financial regulators might respond to these developments with a clearer, more rigorous, operational framework for their systemic financial stability work.

The paper describes analytical models developed at the Bank of England to assess how recent developments may have affected the probability and potential impact of systemic financial crises. The results from these models help to shape the practical framework for the Bank's financial stability work.

The models suggest that financial innovation and integration, coupled with greater macroeconomic stability, have served to make systemic crises in developed countries less likely than in the past, but potentially more severe. Implementing a practical framework for financial stability work in response to this raises many formidable challenges.

If individuals are risk‐averse, the recent change in the profile of crises could lower welfare and would suggest that policymakers should place a higher premium on actions to monitor and mitigate systemic risk. The analysis also highlights the importance of differentiating the probability of risks from their potential impact.

The paper will be of interest to academics interested in systemic risk, central bankers, financial regulators, and financial market participants.

The purpose of this paper is to study the behavior of a worker within an organization. There are two groups inside the firm that develop their work in different ways (sharing different codes). The worker will choose to converge to one of those groups, through an investment in learning the correspondent languages and skills.

The convergence process is analyzed under an optimality setup. Also, the choice among investment alternatives is addressed.

The framework allows the determination of steady state points for both investment alternatives; it is not optimal to converge to a full identification with one group, given that the worker benefits from the proximity to both groups, and therefore, the steady state is found to be an intermediate point somewhere in between the groups’ locations. Under a discrete choice setup, where adaptation and entropy are considered, one observes that the least likely investment process might be chosen (there is a positive probability associated with such an option).

The paper considers a firm where two groups share different codes and cultures. It shows that the groups develop activities that are useful for the organization and that give rise to individual rewards.

This paper aims to identify the archetypes of marketing mix standardization-adaptation in MNC subsidiaries and to examine the relationships between MNC subsidiary strategy, environment and performance through the theoretical lenses of fit and equifinality.

The authors use a mail survey to collect data from MNC subsidiary business units located in multiple countries. They apply a novel archetypal analysis method to identify the diverse archetypes of marketing mix standardization-adaptation in MNC subsidiaries. Finally, through cross-tabulation and regression analysis, they examine the relationships between MNC strategy, environment and performance.

They identify four archetypes of MNC subsidiary standardization-adaptation including a new archetype that is not recognized in the literature. This analysis finds partial support for both fit and equifinality, suggesting complementarity between the two theories.

The study could be extended with longitudinal data to examine the dynamics in MNC marketing mix strategy and performance in response to the changing business environment.

The findings suggest that MNC subsidiary managers could deploy a broader set of international marketing strategy configurations than those currently prescribed to enhance performance.

The authors use a novel configuration-based archetypal analysis method and extend the theoretical typology of international marketing strategies pursued by MNC subsidiaries. The partial support for both fit and equifinality expands the theoretical lens through which we can examine the relationships between MNC marketing strategy, environment and performance.