Three essays in venture capital and intermediation

This study consists of three essay on the nature of venture capital and financial intermediation. The first essay, Venture Capital Contracting under Asymmetric Information , demonstrates how the choice of optimal venture capital contracts is driven by information asymmetries. In particular, a strong theoretical argument for the optimality of convertable preferred stock is given, and an empirical demonstration of the dominance of that contract type is performed. The second essay, Deposit Insurance, Bank Closure, and Imperfect Information presents a theoretical framework under which the relation between optimal deposit insurance, fiscal policy, bank risk taking and risk aversion may be studied. Result derived include the optimal premia\u27s strong dependence on loan risk and risk aversion, with loan capital falling as risk rises. The third essay, Structuring Deposit Insurance for a United Europe , applies the theoretical rubric of the second essay to the problem of bank regulation in a unified European financial market. The difficulties involved in dealing with differences in risk and risk aversion between member states are outlined, and problems in premium smoothing under varying fiscal policies of individual states are explored