On the Friction Coefficient for Turbulent Flow ThroughSectionally Roughened Square Ducts

The friction coefficient of sectionally rough pipes has not been studied yet. The friction coefficient for turbulent flow through sectionally roughened square ducts is experimentally studied. Four arrangements of rough surfaces are used to obtain the sectionally roughened square ducts. It is attempted to predict the friction coefficient for sectionally roughened square ducts from the friction coefficients for alloverly roughened and smooth square ducts

Trust and Law in Credit Markets

This study examines the coevolution of trust and legal institutions in a model of competitive credit markets plagued by asymmetric information. When entrepreneurs' relative payoff to productive activities versus cheating is private information, uncivic ones, who intend to cheat, can enter credit markets and be cross-subsidized by civic ones, who engage in productive activities. To exploit this benefit, uncivic entrepreneurs demand weak legal enforcement through the political process. This rent-seeking behavior interacts with the formation of trust, generating an underdevelopment trap with weak enforcement and distrust. Technological advancement may encourage entrepreneurs' rent-seeking and aggravate distrust

Ignorant Experts and Financial Fragility

We study debt funding markets in which lenders can invest in financial expertise to reduce a cost of acquiring information about the underlying collateral. If the pledgeability of corporate income is low, lenders' information acquisition enhances liquidity, but they reduce expertise acquisition because of a hold-up problem. By contrast, if the pledgeability is high, information acquisition reduces liquidity, so that lenders can extract rents from firms by investing in expertise and creating fear of illiquidity. In this case, as information about collateral decays over time, there is growth in credit and expertise acquisition, making the economy more vulnerable to an aggregate shock. These results suggest that the growth of the financial sector is associated with prevalence of opaque assets and a subsequent crisis

Managing Financial Expertise

We study credit markets in which lenders can invest in financial expertise to reduce the cost of acquiring information about underlying collateral. If the pledgeability of corporate income is low, information acquisition enhances liquidity, but lenders reduce expertise acquisition because of the hold-up problem. By contrast, if the pledgeability is high, information acquisition reduces liquidity so that lenders can extract rents from firms by investing in financial expertise and creating fear of illiquidity. Optimal policy involves subsidizing investment in financial expertise when the pledgeability is low and taxing investment in financial expertise when the pledgeability is high

Ignorant Experts and Financial Fragility

We examine expertise acquisition incentives in a model of debt funding markets in which expertise reduces the cost of acquiring information about underlying collateral. Lenders acquiring expertise gain advantages in financial contracts with borrowers and extract rents from them by creating fear of information production that gives rise to illiquidity. As information about collateral decays over time, there is growth in credit and expertise acquisition, making the economy more vulnerable to an aggregate shock. This result suggests that the growth in the financial sector is associated with the prevalence of opaque assets and a subsequent crisis

Liquidity Policies with Opacity

We examine liquidity policies in an environment in which banks can cover liquidity needs by hoarding liquidity or selling legacy assets to expert investors. They can acquire costly information regarding asset quality and deprive banks with bad assets from accessing the asset market. To prevent expert scrutiny, banks must accept fire sale prices for their assets. These depressed prices induce banks to hoard inefficiently low (high) amounts of liquidity when the likelihood of a liquidity shock is relatively low (high). We show that policy interventions aimed at maintaining opacity in the asset market encourage (discourage) liquidity hoarding when there is underhoarding (overhoarding) of liquidity. This suggests that ex-post interventions can serve as substitutes for ex-ante liquidity regulations

Trust and Law in Credit Markets

This study examines the coevolution of trust and legal institutions in a model of competitive credit markets plagued by asymmetric information. When entrepreneurs' relative payoff to productive activities versus cheating is private information, uncivic ones, who intend to cheat, can enter credit markets and be cross-subsidized by civic ones, who engage in productive activities. To exploit this benefit, uncivic entrepreneurs demand weak legal enforcement through the political process. This rent-seeking behavior interacts with the formation of trust, generating an underdevelopment trap with weak enforcement and distrust. Technological advancement may encourage entrepreneurs' rent-seeking and aggravate distrust

Ignorant Experts and Financial Fragility

We study debt funding markets in which lenders can invest in financial expertise to reduce a cost of acquiring information about the underlying collateral. If the pledgeability of corporate income is low, lenders' information acquisition enhances liquidity, but they reduce expertise acquisition because of a hold-up problem. By contrast, if the pledgeability is high, information acquisition reduces liquidity, so that lenders can extract rents from firms by investing in expertise and creating fear of illiquidity. In this case, as information about collateral decays over time, there is growth in credit and expertise acquisition, making the economy more vulnerable to an aggregate shock. These results suggest that the growth of the financial sector is associated with prevalence of opaque assets and a subsequent crisis