Lack of market transparency can impair the liquidity provision of non-standard liquidity suppliers and make liquidity demand increasing in illiquidity. This can yield strategic complementarities and induce multiple equilibria. Then an initial dearth of liquidity may degenerate into a liquidity rout (as in a “flash crash”) and traders faced with the largest cost of trading are those trading more intensely at equilibrium. An increase in...

We study markets in which traders acquire private information before submitting their schedules. We characterize conditions under which traders over-invest (respectively, under-invest) in information and trade excessively (respectively, insufficiently) on their private signals. These inefficiencies arise from a novel interaction between learning and pecuniary externalities. We show that, generically, no policy based solely on equilibrium

prices and individual trade volumes can simultaneously implement efficiency in information...

We study fintech entry and how it affects competition, investment, and welfare in a spatial model. We find that fintechs with inferior monitoring efficiency can successfully enter because of their superior flexibility in pricing. It follows that fintech borrowers are more likely to default than bank borrowers with similar characteristics. Higher bank concentration leads to higher fintech loan volume and quality. Fintech entry may induce...

We study how information technology (IT) affects lender competition, entrepreneurs’ investment, and welfare in a spatial model. The effects of an IT improvement depend on whether it weakens the influence of lender–borrower distance on monitoring costs. If it does, it has a hump-shaped effect on entrepreneurs’ investment and social welfare. If not, competition intensity does not vary, improving lender profits, entrepreneurs’ investment, and social welfare....

We examine the effects of overlapping ownership among existing firms deciding whether to enter a product market. We show that in most cases—and especially when overlapping ownership is already widespread, an increase in the extent of overlapping ownership will harm welfare by softening product market competition, reducing entry, thereby (in contrast to standard results) inducing insufficient entry, and magnifying the negative impact of an increase...