I examine the role of third-party debt collectors in consumer credit markets. Using law enforcement as an instrument for the number of debt collectors, I find that higher density of debt collectors increases the supply of unsecured credit. A one-percent change in the number of debt collectors per capita leads to a 0.49% change in the average credit card balance and a 1.32% change in the average balance on non-credit card unsecured loans. There is also some evidence that creditors substitute unsecured credit for secured credit when the number of debt collectors increases. Higher density of debt collectors improves recoveries, which enables lenders to extend more credit. Finally, creditors charge higher interest rates and lend to a larger pool of borrowers when the density of debt collectors increases, presumably because better collections enable them to extend credit to riskier applicants.
We propose an exogenous measure of a country’s growth opportunities by interacting the country’s local industry mix with global price to earnings (PE) ratios. First, we find that these exogenous growth opportunities strongly predict future changes in real GDP and investment in a large panel of countries. This relation is strongest in countries that have liberalized their capital accounts, equity markets, and banking systems. Second, we re-examine the link between financial development, external finance dependence, investor protection, capital allocation, and growth. We find that financial development, external finance dependence, and investor protection measures are much less important in aligning growth opportunities with growth than is capital market openness. Third, we formulate new tests of market integration and segmentation. Under integration, the difference between a country’s local PE ratio and its global counterpart should not predict relative growth, but the difference between its exogenous global PE ratio and the world market PE ratio should predict relative growth.
In a perfectly integrated world economy, capital should be invested where it expects to earn the highest risk-adjusted return. Much of the research on real variables and quantities is strongly at odds with the notion of global integration. For example, in their classic study of 16 developed countries, Feldstein and Horioka (1980) found that domestic saving rates explain over 90% of the variation in investment rates. Because the Feldstein and Horioka sample ends in 1974, it does not reflect the considerable progress towards globalization in the 1970s and 1980s. However, Obstfeld and Rogoff (2000) continue to find a high correlation between domestic investment and savings for the 1990-97 period, both for the OECD countries and a group of mid-income emerging countries. Apart from a home bias in real investments, research has documented a home bias in trade. Even controlling for tariffs, a country is much more likely to trade within its own borders than with neighboring countries.1 There is also a well-documented home asset bias. Despite uncontroversial diversification benefits, there is a strong preference for investing in domestic securities.
The results of calculations of semileptonic Bc meson exclusive decay channels using the quark potential model are presented. These results are compared with estimations made using the spectator model. The polarization of charmonia states resulting from b to c decay are also calculated, providing a more detailed experimental check of the model.
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