To understand the link between financial intermediation activities and the real economy, we build a general equilibrium model in which agency frictions in the financial sector affect the efficiency of capital reallocation across firms and generate aggregate economic fluctuations. We develop a recursive policy iteration approach to fully characterize the nonlinear equilibrium dynamics and the off-steady-state crisis behavior. In our model, adverse shocks to agency frictions exacerbate capital misallocation and manifest themselves as variations in total factor productivity at the aggregate level. Our model endogenously generates countercyclical volatility in the aggregate time series and countercyclical dispersion in the marginal product of capital and asset returns in the cross-section.

This study examines the association between customer base concentration and corporate public disclosure policy. When the customer base is more concentrated, large customers face lower costs of accessing the supplier firm's private information, reducing customers' overall demand for the supplier's public information, suggesting a negative association between customer concentration and the amount of public disclosure. Alternatively, large customers have greater bargaining power and may demand that the supplier firm provide more public disclosures. Consistent with customer concentration facilitating private information flow from the supplier to customers, we find that the frequencies of management earnings and sales forecasts are negatively associated with customer concentration among firms with major corporate customers. These associations are stronger when the supplier and customers are engaged in more relationship‐specific investments, when customers' private information acquisition costs are lower, and when it is less costly for customers to find another supplier.

Siblings are important sources of support. Male siblings, in particular, are valuable extended family resources in patriarchal societies such as China. This paper examines the effects of the number of brothers on household stock market participation in China. We find that having more brothers increases both the probability of stock market participation and the portfolio share in stocks. This positive effect is more pronounced for individuals who face high income risk, suffer from poor health, lack private insurance, and reside in areas with low financial development and high gender discrimination. In addition, the brother effect persists in recent periods. This evidence highlights the importance of informal risk-sharing networks in household investment decisions. Our results imply that demographic changes such as fertility decline might have unnoticed but sizable impacts on household portfolio choice, especially in countries with strong family ties.