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

46 Pages Posted: 20 Aug 2000 Last revised: 27 Jun 2010

See all articles by Bruce C. N. Greenwald

Bruce C. N. Greenwald

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Joseph E. Stiglitz

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: March 1991

Abstract

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.

Suggested Citation

Greenwald, Bruce and Stiglitz, Joseph E., Information, Finance, and Markets: The Architecture of Allocative Mechanisms (March 1991). NBER Working Paper No. w3652. Available at SSRN: https://ssrn.com/abstract=227989

Bruce Greenwald

Columbia Business School - Finance and Economics ( email )

3022 Broadway
405b Uris, Dept. of Finance & Economics
New York, NY 10027
United States
(212) 854-5553 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joseph E. Stiglitz

Columbia Business School - Finance and Economics ( email )

3022 Broadway
814 Uris Hall
New York, NY 10027
United States
(212) 854-0671 (Phone)
(212) 662-8474 (Fax)

HOME PAGE: http://www.josephstiglitz.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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