In the last decade, a debate has resurfaced about whether financial constraints stemming from asymmetric information and incentive problems play an important role in propagating monetary policy shocks. This paper investigates the monetary transmission mechanism in the UK and its impact on the availability of bank credit to small and medium size firms. The empirical specification is based on a disequilibrium model that allows for the possibility of transitory credit rationing. Sample firms are classified endogenously into ‘borrowing constrained’ and ‘borrowing unconstrained’. The analysis of credit rationing takes into account not only firm specific variables, but also important macroeconomic factors such as the prevailing monetary conditions and the stage of the business cycle. We find that (i) firms’ assets play an important role as collateral in mitigating borrowing constraints; (ii) during periods of tight monetary conditions corporate demand for bank credit increases, whereas the supply of bank loans is reduced; (iii) to avoid bank credit rationing smaller companies increase their reliance on interfirm credit; (iv) the proportion of borrowing constrained firms is significantly higher during the recession years of the early 1990s than at other times.

This paper examines the impact of VC ownership beyond the IPO listing on important and consequential corporate decisions in a firm's lifetime. We find that VC funds delay the initiation of dividends by approximately two years, delay the use of external growth strategies, and postpone introduction to the corporate bond market. These results are consistent with the view that VC funds extend the growth phase of the firm. We show that their presence at the time of these decisions leads to positive stock price reactions, suggesting that they provide a certification effect that signals continued growth opportunities, and that VC certification is not limited to the IPO listing.

One in five Zambian children lives with an HIV/AIDS-infected adult. We estimate the effect that the availability of adult antiretroviral therapy (ART) has on the health of such children. Using a triple difference specification, we find that adult access to ART resulted in increased weight-for-age and decreased incidence of stunting among children younger than 60 months who resided with an infected father or other infected adult in an intact household. Because the increased availability of adult ART in sub-Saharan Africa has multigenerational effects, cost-effectiveness estimates restricted to direct recipients understate the economic benefit of the treatment.