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Since the initiation of economic reforms in the late 1970s, China has undergone a radical socioeconomic transition, characterised by unprecedented economic growth and poverty reduction, but also rapidly increasing inequality – particularly between rural and urban areas. In recent years this uneven development has been increasingly perceived as a threat to ‘harmonious’ development, and the central government has prioritised the de-marginalisation of the countryside. Key to this development agenda is the incorporation of rural areas into the urban-based market-oriented financial system. For this reason, Chinese development planners have turned to microcredit – i.e. the provision of small-scale loans to ‘financially excluded’ rural households – as a means of increasing ‘financial consciousness’ and facilitating rural de-marginalisation. Drawing on a large original qualitative data set collected during in-depth ethnographic fieldwork in rural Jiangxi Province, this Ph.D. dissertation employs an actor-oriented livelihoods approach to address the question: What role do microcredit programmes play in local processes of socioeconomic development and the livelihoods of diverse local actors? By examining this overarching research question, this study makes a number of original contributions to current understandings of, and debates over, the nexus between microcredit, development and livelihoods in rural China and beyond. First, the research outlines how the heterogeneously implemented microcredit programmes must be understood as emerging from locally (re)produced processes, rather than the inevitable result of top-down causality. Second, the dissertation details how microcredit facilitates de-marginalisation for some, while simultaneously exacerbating the marginalisation of others – thereby contributing to our understanding of the multifaceted, non-linear and relational nature of external ‘impact’. Finally, this study exposes the ways in which external interventions (such as microcredit) reflect the contradictions and paradoxes implicit in rural China’s contemporary development landscape, thereby contributing to wider debates over the nature of rural development in China and other ‘developmental’ contexts.

The lack of regulatory oversight on Credit Rating Agencies (CRAs) has for a long time been viewed as an anomaly, particularly as CRAs were perceived to wield unfettered power, sanctioning the flow of funds between investors and borrowers in global securities markets. The regulatory void was in contrast to the heavy reliance on credit ratings by regulators in determining minimum capital adequacy requirements for banks and other depository institutions. CRAs and other information intermediaries were said to have failed in their information intermediary roles, possibly causing various corporate collapses and exacerbating calls for regulation. Various scholars and practitioners argued that the lack of CRA regulation caused a number of legacy problems which allegedly compromised CRAs’ objectivity and independence in their information intermediation roles in the global securities market. The commonly touted legacy problems included lack of competition in the ratings market; conflicts of interest arising from the issuer-pays model; opaque rating methodologies as well as lack of accountability among CRAs. Following the 2007-8 global financial crisis where CRAs allegedly failed to provide timely rating adjustments to deteriorating securities, the European Commission (EC) gazetted the 2009 regulations to stem the legacy problems in CRA operations and prevent further crises in the European Union (EU). Rather than quell concerns on the operations of CRAs, the new regulations triggered further academic debates regarding their motivations, purpose, impact, timing and effectiveness. It was not clear whether practitioners working with credit ratings shared the emerging concerns. This study was conducted to gauge the views of practitioners working with credit ratings on the perceived impact of the EC regulations. The study took an interpretivist approach, employing semi structured interviews. Study participants were initially selected purposively and subsequently snowballed from four groups comprising issuers, institutional investors, CRAs and Other Interested Parties. The study adopted a metaphorical data analysis approach, using the endogenous regulation theory to conclude that there was a disconnection between the regulators and those regulated. It was noted that some regulatory conceptions lacked practical relevance and could detrimentally affect market operations. The study made various contributions to practice, theory and literature. It recommended an endogenous and more inclusive regulatory approach, fostering closer cooperation between regulators and those regulated, particularly in a tightly-closed industry where those regulated possessed more information regarding the technical nature of the industry than regulators.

Following the recent financial crisis that has affected some major economies around the world, and its attendant consequences, there have been calls for ways of practicing finance more responsibly especially here in the UK. One such candidate that has been identified and promoted as a viable alternative to the way finance is being practiced is Islamic finance. Although tiny in its present size compared to conventional finance, its rate of growth, moral underpinnings and relative stability has been pointed out as a reason why it should be taken seriously. Even before the financial crisis, the UK government had identified the Muslim community in the UK as being financially excluded in terms of financial choices and had taken steps to correct this perceived anomaly. The UK government’s stated objective in Islamic finance were twofold, first financial inclusion for UK Muslims that were not participating in the financial markets due to reasons of faith, and the promotion of continued dominance of the UK especially London, as a global financial city by making it a global hub for Islamic finance. This thesis investigates the UK government’s discourse on Islamic finance around the use of Islamic home purchase plans, the first Islamic finance product licensed in the UK. It traces the motives of the protagonists in establishing this market, and the various steps that have been taken to actualise it. In doing so, the thesis contrasts this with the views of those that have embraced this new market by collecting empirical data at various levels and in the process reveals those that have not embraced this new subjectivity especially those that have subverted the growth of the market. This thesis argues that the introduction of Islamic finance and the financial subjectification of Muslims can be traced to a drive for financialisation which is anchored in the belief of ideologically-driven discourses that privilege financial markets as the medium for individuals and households‘ socioeconomic reproduction, which removes the responsibility of government for the economic and social development of its citizens, and at the same time enables more integration of different kinds of groups into the broader circuits of capital and financial accumulation. For the majority of the UK Muslims, this process has not meant more financial inclusion. As exemplified in the thesis, embracing this new subjectivity is beyond the reach of most UK Muslims and has only highlighted, and in some cases exacerbated these differences.

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This thesis consists of three self–contained game–theoretic analyses of the contractual relationship between borrowers and lenders. A key element of this relation concerning their strategic variables than their opponents. Optimal contracts for different environments are derived and studied. They include ‘bankruptcy’ games, which are designed to structure the parties’ bargaining under certain circumstances. The first chapter questions the idea that being a unique lender to a firm is better than sharing the lender’s role. Even borrowers with poor prospects will apply for loans, if their main goal is to be financed, and re–financed if necessary. With one lender, refinancing is always provided once former loans are ‘sunk’. With two lenders, the situation may be different: inefficient negotiations have to determine how the overall loss is allocated. Some borrowers may therefore not be refinanced, and this may keep borrowers with poor prospects from applying for loans. The second chapter extends this model by adding a timing dimension: a borrower finds out about poor prospects earlier than his lender. He can ask for refinancing, or simply ‘wait and pray’. Either ‘soft’ contracts or ‘tough’ contracts may be optimal contracts: ‘soft’ contracts treat the borrower well if he asks for refinancing, while ‘tough’ contracts don’t (and the lender will not have the option of refinancing). ‘Hybrid’ contracts are strictly worse than the two ‘pure’ types. From this we draw conclusions for the design of bankruptcy laws, and for empirical work on bankruptcy. The third chapter analyses the interdependence of financial and production decisions. Debt contracts are frequently thought to lead to excessive risk taking — in a Cournot setup this means excessive production. At the same time, debt is a costly type of financing, which should reduce production. This conflict is analysed in a setting which allows to endogenise ‘debt’ contracts. The main result is that there is no excessive production, and financial constraints reduce output. However, for large levels of ‘inherited’ debt, it may be that output increases in the level of debt.

Customer satisfaction (CS) is critical to success in banking. However, there is little agreement on which antecedents can be employed to achieve it. Moreover, in the context of Islamic banking, religiosity plays a major role in affecting customers’ choice of bank and banking satisfaction. In response, this thesis developed an Islamic religiosity scale measurement and an integrated model of customer satisfaction for Islamic credit-card users. In particular, this thesis sought to investigate the role of religiosity and antecedents of Islamic credit-card users’ satisfaction. Furthermore, it presented and discussed empirical findings from mixed methods approach employing semi-structured interviews of seven respondents and an online survey of 560 credit-card users in Malaysia. The study used confirmatory and structural equation modelling to examine the survey data. The findings of this thesis largely support the hypothesised relationships proposed in the theoretical model. Specifically, the results revealed that the functional service quality (FSQ), technical service quality (TSQ) and the religious and ethical service quality (RESQ) are crucial and differ in affecting customer satisfaction. The results also provide strong evidence that religiosity moderates between the antecedents and customer satisfaction. Most importantly, Shari’ah compliance and ethical dimensions (constructs in RESQ) are necessary determinants of Islamic credit-card users’ satisfaction. This thesis contributes to the existing theoretical and practical knowledge by providing, for the first time, an Islamic religiosity scale measurement. Secondly, evidence is presented that religiosity plays a significant contribution towards the customer satisfaction model. Thirdly, the integration of FSQ, TSQ and RESQ creates a comprehensive Islamic customer satisfaction model. Fourthly, since the integrated model involves religious factors (i.e. Shari’ah compliance), religiosity contributes to the variation of customer satisfaction. The inclusion of Shari’ah compliance, ethical dimensions, technology and communication as first order constructs and FSQ, TSQ and RESQ as second order constructs contribute to the body of customer satisfaction and Islamic banking literature. The findings imply the need for the banks to lever on the key antecedents of customer satisfaction, which include Shari’ah compliance and ethical dimensions.

This thesis examines cross-market correlations between means and variances in sovereign credit markets and captures the presence of any contagion effect by focusing on parallel movements between markets in the wake of the recent crisis. Furthermore, it focuses on the effect of policy interventions on the dynamics of these correlations. First, to look at the correlation between markets, we investigate the interaction between sovereign spreads and creditworthiness. Our results suggest that there are stable long-term cointegration relationships and significant short-term reactions between government CDS spreads to rating and outlook changes, with rating and outlook leading CDS spreads. After confirming the leading role of credit ratings, we further investigate the spillover effect from ratings to CDS spreads across markets and countries. We are concerned with the spillover effect of a change in the sovereign credit rating and outlook of one country on the sovereign CDS spreads of other countries. We find that rating and outlook announcements originating from different countries have a strong spillover effect across countries but not across regions, while countries’ initial credit status has limited effect on such spillover. Moreover, the US market is a strong source of global spillover to all the countries. After controlling for US factors, the international spillover effects are found to be stronger during crisis periods than in tranquil periods. In addition, credit outlook changes have a greater impact on sovereign CDS spread responses than rating change announcements, suggesting that outlook changes carry more new information. Furthermore, we are also concerned with the influences of rescue plans by the European Union (EU) and the International Monetary Fund (IMF) on the interdependence of sovereign credit risk, measured by CDS spreads, in the Eurozone. The study focuses on the interaction between two groups of nations, ‘cores’ (Austria, Belgium, France, Germany and the UK) and ‘PIIGS’ (Portugal, Ireland, Italy, Greece and Spain), before and after these bailouts. We are able to control for the rating and other external influences affecting sovereign CDS spreads. There are three principal findings. (1) Before the EU interventions, the spreads of the rescued countries – Greece, Ireland, Portugal and Spain (PIGS) – had a strong influence on rating changes in Austria, Belgium, France, Germany and the UK (core European countries). (2) After bailout, our results underline increased interdependencies between sovereign credit risk in the EU area, especially between the rescued country and the core countries. This suggests that these bailout plans not only increase the influence of the rescued country on the development of the core nations, but also amplify the sensitivity of PIIGS to changes in the cores. (3) Different countries will vary in their financial stability and their fundamentals will differ, so they will be expected to respond differently to a bailout. Indeed, distinctive interaction behaviours across countries, related to country-specific characteristics (fiscal outlook), is found for each of the financial policy interventions. Second, to look at the correlation between variances, this study investigated correlation between 9 major EMU countries’ CDS markets during the sovereign debt crisis, and hence examined the impacts of policy interventions on these markets, using the DCC-GARCH model. The main purpose was to assess the extent to which the policy interventions influenced the dynamics of correlations in sovereign CDS markets, after controlling for international influence (US VIX), and both domestic and foreign sovereign credit rating and outlook. Our results suggest that correlations are time-varying for all the sample countries. Most of the policy interventions led to a significant increase in the pairwise correlations. Our interpretation is that the “two-way feedback” between the healthy country and the bailed-out country causes the public-to-public risk transfer. The increased debt and deficit partly result from assisting other troubled nations. Through policy interventions, any deterioration in the sovereign creditworthiness of the healthy countries could transmit back to the bailed-out countries. Moreover, the estimation result suggests that policy interventions, rather than VIX and credit rating/outlook, play the most direct and significant role in shaping the structure of dynamic correlation in the EMU markets.

The aim of this thesis is to analyse formal and informal credit in Ethiopia and Malawi. As credit markets in developing economies are dominated by informal institutions, the analysis of the interaction between formal and informal institutions is crucial to understanding how welfare improvements can be achieved. The thesis begins with an explanation of the motives for demanding credit. It then focuses on analysing the existence, diffusion and persistence of informal nance in developing economies. Much research on this topic remains hamstrung by the quality and availability of data and by the lack of empirical models, constraining the meaningful identification of the characteristics of the localities where informal institutions operate. The central idea of the first essay is to develop an empirical model that explains the determinants of participation in informal credit arrangements. We adopt an endogenous switching regression model of access to informal credit where the availability of a particular type of informal arrangement varies across clusters in rural Ethiopia. This strategy allows for taking into account substitutability between sources as well as household and cluster socioeconomic characteristics. The second essay exploits the idea that banks can crowd out informal borrowing in Malawi by creating microfinance institutions that acquire information in innovative ways. We adopt propensity score matching and find that the creation of a specific microfinance programme reduces informal borrowing. The third essay uses the credit limit variable to test liquidity constraints and the spillover hypotheses in Malawi. A ten percent increase in the informal credit line increases households' demand for informal credit by more than nine percent. We also find that a 10 percent increase in the credit limit of a microfinance programme reduces the informal demand by four percent, partly explaining the coexistence of formal and informal credit institutions.

This thesis is structured to research on a financial derivative asset known as a credit default swap (CDS). A CDS is a contract in which the buyer of protection makes a series of payments (often referred to as CDS spreads) to the protection seller and, in exchange, receives a payoff if a default event occurs. A default event can be defined in several ways, including failure to pay, restructuring or rescheduling of debt, credit event repudiation, moratorium and acceleration. The main motivation of my PhD thesis is to investigate the determinants of the changes of CDS spreads and to model the evolution of spreads. Two widely traded types are corporate and sovereign CDS contracts, the first has as its underlying asset a corporate bond and, hence, hedges against the default risk of a company; the second type hedges against the default risk of a sovereign country. The two contract types have different risk profiles; for example, it is known that liquidity premium with different maturity varies significantly for a corporate CDS but less so for a sovereign CDS because, in contrast with the corporate markets where a majority of the trading volume is concentrated on the 5-year CDS, the sovereign market has a more uniform trading volume across maturities. In light of the difference, this thesis is divided into four parts. Part A introduces the motivation and research questions of this thesis, followed by literature review on debt valuation, with emphasis on default and liquidity spreads modelling. Part B aims at the role liquidity risk plays in explaining the changes in corporate CDS spreads. Part C models sovereign CDS spreads with macro and latent factors in a no-arbitrage framework. Part D concludes this thesis with a list of limitations and further research direction.