The thesis is composed of three empirical essays on international economics and finance. The first chapter investigates how cross-border capital flows are intermediated by domestic banks and if they are channeled to their more productive use. Findings from a large panel of small firms in twelve Central Eastern European countries show that waves of capital flows are associated with relatively higher credit volumes to the least productive firms within an industry. These firms are also riskier and hold more collateral, suggesting a risk-taking channel of capital inflows that leads to a credit misallocation towards the less productive. The second chapter examines three decades of capital flows data in a large sample of countries to study, indirectly, the impact of capital inflows on the quality of local institutions. Consistent with an institutional quality channel, industries that are structurally more reliant on good institutions grow more than others after foreign capital flows into the private sector. Those benefits, however, do not always materialize and are subject to thresholds. The final chapter explores in a novel empirical setting the notion that limited information processing capacity and the ensuing specialization of investors would induce value-relevant information to diffuse gradually across segmented asset markets. The money managers, who are sophisticated and specialized speculators in the commodity futures market, would by and large react to commodities’ informational updates relatively fast before the information is impounded into harder-to-analyze securities (stocks issued by commodity producers), especially the stocks of non-transparent producers.