NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Information, Finance, and Markets: The Architecture of Allocative Mechanisms

Bruce C. Greenwald, Joseph E. Stiglitz

NBER Working Paper No. 3652 (Also Reprint No. r1764)
Issued in March 1991
NBER Program(s):   ME

While bankers and businessmen have long recognized the importance of finance. financial constraints, and financial institutions, they have played a secondary role in neoclassical economic theory. This paper identifies the economic functions with which financial institutions have been concerned, the central problems which they face, and the alternative ways by which those problems can and have been addressed. The importance of limited liability and the legal environment is stressed. The final section explores the relationship between information-based finance constraints, the evolution of the firm, and the growth of the economy.

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Document Object Identifier (DOI): 10.3386/w3652

Published: Industrial and Corporate Change, Vol. 1, No. 1, pp. 37-68, (1992).

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