Essays in finance and economic activities

The main theme of my dissertation is to examine the effects of financial markets on financial contracting, economic growth and output fluctuations. I examined three topics under this theme: lending relationships between bank loan officers and firms with the possibility of collusion, the effects of the distribution of heterogeneous agents on equilibrium prices and economic growth, and the empirical evidence of effect of financial intermediation shocks on output growth fluctuations.; Chapter I gives a brief introduction of the dissertation. Chapter II analyzes how lending relationships between firms and bank loan officers and the possibility of collusion affect the bank's expected return. A long-term relationship between the firm and the bank loan officer increases the probability of correct signals observed by the bank loan officer, but the long-term loan officer will not always be detected when he colludes with the firm. This tradeoff between improved monitoring quality and lower probability of being caught implies that the long-term loan officer is more likely to collude in equilibrium than the short-term loan officer given other things equal.; Chapter III analyzes how the distribution of heterogeneous agents affects the equilibrium prices and growth rate in an overlapping-generations model with occupational choice. Each agent can choose to be workers or entrepreneurs. They are different in terms of their managerial ability of the production process if they become entrepreneurs. For a given distribution, a decrease in the number of entrepreneurs may increase the growth rate since the average managerial ability of the remaining entrepreneurs is higher. For a given family of distributions, I show the change of distribution parameters has important effects on the results of the model. I also differentiate between production and banking technologies and analyze their effects on prices and growth.; Chapter IV studies the relationship between financial shocks and output fluctuations empirically. Specifically, I want to see how financial shocks affect the short-run output growth fluctuations. Using the structural VAR framework, I identify the structural financial shocks from the fiscal, monetary and technological shocks, and use impulse response and variance decomposition to analyze the contribution of financial shocks to the total variation in output growth rate. The empirical analysis is performed on the following Asian economies: HongKong, Korea, Singapore and Taiwan.