This thesis consists of three chapters. Using economic theory, they analyze the effect of certain changes in the environment on some variables of economic interest. The first chapter studies the effect of securitization on asset pricing when agents have heterogeneous beliefs about future dividends, prices and interest rates. The securities are constrained to belong to tranches of different payment priority, mimicking collateralized debt obligations (CDO). Securitization weakly increases the gap between the price of an underlying asset and any perceived present value of its dividends. The necessary and sufficient conditions for this increase to be strict are identified. In cases where there is a type of agent more sophisticated than all others, securitization can decrease the rate of return some agents receive without increasing the rate of return of none. The second chapter checks the robustness of a surprising result in Dekel et al. (2007). The result states that strict Nash equilibria might cease to be evolutionary stable when agents are able to observe the opponent’s preferences with a very low probability. The chapter shows that the result is driven by the assumption that there is no risk for the observed preferences to be mistaken. In particular, when a player may observe a signal correlated with the opponent’s preferences, but the signal is noisy enough, it is shown that all strict Nash equilibria are evolutionary stable. The third chapter studies one dimension of the social cost of bad public infrastructure in developing countries. It uses an extensive period of power rationing in Colombia throughout 1992 as a natural experiment and exploit exogenous spatial variation in the intensity of power rationing as an instrumental variable. It is estimated that power rationing increased the probability that a mother had a baby nine months later by five percent. Women who were exposed to the shock and had an additional child tend to be in worse socio-economic conditions more than a decade later.

The financial crisis of 2007–2009 and the resultant pressures exerted on policymakers to prevent future crises have precipitated coordinated regulatory responses globally. As a result, large scale regulatory change is being enacted within this industry to protect investors and economic systems. Very little research exists, either prior to the crisis or since, on how compliance practices are managed through technology within financial organizations. The research objective of this study is to understand how institutional changes to the regulatory landscape may affect corresponding locally institutionalized operational practices within financial organizations. The study adopts an Investment Management System (IMS) as its case and investigates different implementations of this system within eight financial organizations, focused on investment activities within capital markets. This study makes a contribution by outlining a detailed review of this technology and identifying post-crisis practices for organizing compliance and the social forces influencing them through technology. Through symbolic systems, relational systems, routines and artefacts the IMS diffuses new compliance practices and further embeds existing ones. The study shows that this system is not objective and is currently in flux as this dynamic and complex environment evolves in the wake of the global financial crisis. Correspondingly, social, political and functional pressures are acting to deinstitutionalise related behaviours and practices. Yet compliance behaviours and practices are simultaneously being institutionalised through coercive, normative and mimetic mechanisms. However, the study also highlights the ability of some agents to exercise limited control on the impact of regulatory institutions. The research found evidence that some older practices persisted and so the study suggests that the institutionalization of technology induced compliant behaviour is still uncertain. The research makes an additional contribution to practitioners by distilling the findings into a model of IS capabilities for compliance and a model to measure the maturity of a firm’s compliance capabilities.

Risk is central in the study of rural development. To cope with risk, smallholder farmers rely on a range of formal and informal insurance mechanisms: an extensive literature has explored their interactions. Yet, our understanding of the implications of these interactions for smallholder farmers’ decision-making is incomplete. This thesis addresses this scholarly gap by shedding new light on the risk-related decisions of smallholder farmers and the mechanisms through which networks affect these decisions. To do so, it relies on a combination of experimental and non-experimental economic analyses. The first chapter draws on a framed field experiment in Gujarat, India to explore the effect of selling weather index insurance to groups (as opposed to individuals) on the investment decisions of the insured. The analysis reveals that group pressure reduces risk taking among individuals with group insurance in contexts with perfect information about peer investment decisions. Group insurance thus suffers from the same potential pitfall as group microcredit. The second chapter examines the extent to which informal transfers can explain take-up of individual weather index insurance. It aims to disentangle two channels through which informal transfers influence decisions to purchase insurance: (i) informal risk sharing and (ii) moral hazard. As in the first chapter, the study draws on a framed field experiment in Gujarat. The main finding of this experiment is that redistribution norms reduce take-up: moral hazard leads to lower levels of insurance coverage. The final chapter builds on these results with a nonexperimental analysis of panel data from a rural household survey in India. It examines how cultural obligations to redistribute within networks affect investments in selfprotection. The empirical evidence suggests that increases in individual income lead to higher investments, but increases in network income lead to lower investments due to moral hazard. Collectively, the three papers nuance our understanding of how redistribution norms affect the risk-related decisions of the rural poor. While not negating their consumption smoothing benefits, this thesis indicates that networks also affect decision-making via group pressure and moral hazard. Such externalities could be forestalled by targeting insurance in rural areas with weaker redistributive norms or modifying insurance policy designs. Further research on the welfare implications of such approaches is thus recommended.

What role does politics play in financial crises and how does this affect economic outcomes? This thesis employs a political economy framework to examine the effect politics has on the causes, containment, and resolution of financial crises. The first paper examines the development of Irish financial regulation and supervision in the context of the politics of financial services policy. It argues that domestic politics prior to the crisis in Ireland played a significant contributing role in fostering a permissive banking environment which allowed the build up of financial imbalances. The second paper, with Christopher Gandrud, aims to understand why policymakers may end up choosing sub-optimal financial crisis containment strategies when taking decisions under uncertainty. We develop a signalling model of financial crisis management to enhance our understanding of the interactions between bureaucrats and decision-makers and to show how asymmetries of information can have significant implications for policy choice. The third paper, with Alessio Terzi, uses cross-country econometric evidence to examine the impact that political and party systems have on the fiscal cost of financial sector intervention. The results of our empirical analysis suggest that there is a systematic relationship between political economy factors and the fiscal cost of financial sector intervention in banking crises. We find that governments in presidential systems are associated with lower fiscal costs when managing banking crises. Looking further at crisis containment strategies, we show that these governments are are less likely to employ costly bank guarantees and bank recapitalisations which expose the state to significant contingent and direct fiscal liabilities, and are more likely to impose losses on depositors. The fourth paper analyses reform of the framework for crises management in the EU from a political economy perspective, following the 2007 financial and subsequent sovereign debt crisis. It explains how the limits of coordination and unprecedented public support led to the proposal for the establishment of a harmonised framework for bank resolution across the EU. However, the distributional consequences of financial sector support and the establishment of the Single Supervisory Mechanism led to deeper integration for euro area Member States and agreement on the Single Resolution Mechanism. It analyses in detail the negotiations on the financing structure for future resolution, decision-making procedures and crisis management tools and demonstrates how the power of certain Member States and distributive conflict with regard to legacy assets shaped the new architecture. It also highlights the important role the European Parliament played in the negotiations. This thesis makes a number of substantive contributions to political economy. The new theoretical and empirical findings will help foster a better understanding as to how governments may react to future financial crises and show what factors lead to and shape reform. It also has a number of policy implications. It stresses the need for a robust regulatory and supervisory architecture which creates the appropriate incentives for bureaucrats to provide timely and accurate information to decision-makers. It also highlights the need for a more intrusive approach to supervision.

The thesis investigates to what extent external finance premium channels by amplifying the business cycle account for the economy turndown in the UK. It builds a DSGE model follows Smets and Woulters (2007), extends to incorprorate with the Bernanke Gertler and Gilchrist (1999) financial accelerator mechanisms and adjusts for an Armington (1969) version small open economy. We evaluate the model based on the calibration and re-estimate the model by Indirect Inference method using un-filtered nonstationary data in the period of 1975Q1 to 2015Q4 under the inflation targeting monetary policy regime. Although the model captures the counter cyclical feature of external finance premium proposed in most of the literatures, external finance premium shocks on the financial sector do not play a dominant role in explaining a recession. The main dominant effects of output fluctuations are still coming from the non-financial shocks, in particular, the non-stationary productivity shock and the labour supply shock.

The aim of this thesis was to investigate the role of television news media in maintaining cultural hegemony in the United States. The financial crisis of 2008 and 2009 was used as a window into this process. For this investigation, a qualitative frame analysis was conducted on samples of television news coverage from major moments during the financial crisis and the resulting economic recession. Additionally, peer group discussions were conducted as a window into how people who fit the social and cultural imaginary of “Middle America,” an important part of the historic bloc which forms the contemporary United States cultural hegemony, discussed the financial crisis and recession in a social context. The results found five major explanatory frames which dominated coverage of the financial crisis; strategygame frame, survivor stories, bootstraps frame, opportunity in disaster, and populism. Taken in aggregate, these frames directed attention away from the actions of the economic elite and onto either the actions of politicians or the responsibilities of non-elite individuals. Moreover, these frames deprived the information environment of information which might otherwise facilitate an understanding of the financial crisis as resulting from the actions and practices of the business elite or the economic structure. Participants in the peer group discussions seemed to echo much of the picture provided by television media, demonstrating in particular a pervasive belief in a dysfunctional American government. Overall, participants struggled to demonstrate a fundamental understanding of the financial crisis, and this hindered their ability to form and express counter-ideologies. This was in spite of pervasive, emotional expression of betrayal, dissatisfaction and economic vulnerability. Overall, it is concluded that television news media functions as a hegemonic apparatus due to its practices producing frames and narratives which obscure the role of the capitalist classes even in the event of an economic crisis.

Productivity - the efficiency with which firms transform inputs into outputs - is the root of economic growth and the improvement of living standards. This thesis explores different financial frictions that affect productivity at the corporate level and their aggregate consequences. The first chapter, “Credit Market Frictions and the Productivity Slowdown”, is joint work with John Van Reenen and Timothy Besley. UK labour productivity growth has been particularly weak since the financial crisis. We develop a theoretical framework to quantitatively assess the magnitude of financial frictions and their impact on aggregate productivity. We apply this framework to administrative panel data on UK firms. The approach highlights a firm’s default probability as a sufficient statistic for credit frictions. We use Standard and Poor’s "PD Model" algorithm to measure market participants’ perceptions of firm-specific default risk. The theoretical framework suggests an aggregate measure of credit market inefficiency which we show can be applied to UK administrative panel data to explain how far the dramatic productivity slowdown in the wake of the crisis is due to credit market frictions. We find that credit frictions cause a loss of 7% to 9% of GDP on average per year in 2004-12. These frictions increased during the crisis and lingered thereafter accounting for between one-quarter and one-third of the productivity fall in 2008-2009 and of the gap between actual and trend productivity by the end of 2012. The second chapter, “Management practices, precautionary savings, and company investment dynamics”, investigates a potential channel behind the well-documented positive correlation between the quality of management practices and firm performance. The main hypothesis of the paper is that financially constrained firms accumulate larger cash reserves when they are better managed. This allows them to avoid the costs of underinvestment when future profitable investment opportunities arise. The theoretical analysis predicts that well managed firms which face financial constraints save relatively more out of their cash flows and accumulate more cash when their cash flows are more volatile. This enhanced precautionary behaviour arises because management quality alleviates agency problems between equity holders and managers. The empirical analysis provides evidence to support these predictions using data from the World Management Survey and administrative and accounting data on UK firms. A direct consequence of this enhanced precautionary behaviour is that well managed firms invest more efficiently. Specifically, they adjust more quickly towards their long-run equilibrium capital stock when their current capital stock falls short of the latter. The paper provides evidence of this using a dynamic model of investment. The third chapter, “When Does Leverage Hurt Productivity Growth? A Firm-Level Analysis”, is joint work with Fabrizio Coricelli, Nigel Driffield, and Sarmistha Pal. Following the global financial crisis, several macroeconomic contributions have highlighted the risks of excessive credit expansion. In particular, too much finance can have a negative impact on growth. We examine the microeconomic foundations of this argument, positing a non-monotonic relationship between leverage and firm-level total factor productivity (TFP) growth. A threshold regression model estimated on a sample of Central and Eastern European countries confirms that TFP growth increases with leverage until the latter reaches a critical threshold beyond which leverage lowers TFP growth. We find similar non-monotonic relationships between leverage and proxies for firm value. The fourth chapter, “The sullying effect of credit sclerosis on productivity”, explores the impact of depressed credit flows on productivity in a partial equilibrium search and matching model of the banking market. Reputational costs associated with the termination of lending relationships drive a wedge between rates on new and existing loans. This induces misallocation of capital across borrowers. The phenomenon is one of "credit sclerosis": Low-productivity firms are kept alive through subsidised loan rates, while high-productivity entrants face an inefficiently high cost of borrowing and limited supply of new loan facilities. As a consequence, too much credit is allocated to old firms. Aggregate labour productivity and TFP are reduced. The model also sheds some light on why a policy tool like the UK’s Funding for Lending Scheme might fail to revive productivity in the presence of costly loan termination.

This thesis engages with the following three questions. First, how should the presence of risk and ambiguity affect how we distribute a benefit to which individuals have competing claims? (In line with common use in decision theory, a case involves risk when we can assign at least subjective probabilities to outcomes and it involves ambiguity when we cannot assign such probabilities.) Second, what is it about the imposition of a risk of harm itself (that is, independently of the resulting harm), such as the playing of Russian roulette on strangers, which calls for justification? Third, in the pursuit of the greater (expected) good, when is it permissible to foreseeably generate harms for others through enabling the agency of evildoers? Chapters 1 through 3 of the thesis provide an answer the first question. Chapter 1 defends the importance of a unique complaint of unfairness that arises in risky distributive cases: that sometimes individuals are better off at the expense of others. Chapter 2 defends a view called Fairness as Proper Recognition of Claims which guides how a decision-maker ought to act in cases where individuals have unequal claims to a good. Chapter 3 considers how the presence of ambiguity affects distributive fairness, and defends an egalitarian account of the evaluation of ambiguous prospects. Chapter 4 provides an answer to the second question through a defence of the Insecurity Account, which is a unique way in which impositions of risks of harm can be said to harm individuals, namely by rendering the victim’s interests less secure. Chapter 5 provides an answer to the third question by defending what I call the Moral Purity Account, to explain when it is permissible to provide aid in cases where individuals are harmed as a foreseeable consequence of the provision of such aid.

This thesis consists of three chapters on public and development economics that study incentives in public policies from the perspective of microeconomics. It is devoted to understanding behavioural responses in public policies that are relevant to its design in each domain, including trading in market with frictions, enrolment in education and child marriage practice for young girls, and childcare resource allocation in family. Chapter 1 studies how transaction tax policy affect market with frictions. Transaction tax in property market, with tax rate decreasing in holding period of property, received attention from governments in Asia for moderating speculation since 2000s. Using administrative transaction record of property, this chapter studies the behavioural response to the transaction tax in the timing of transaction, tax incidence and selection of buyers in Hong Kong and Singapore. I find that the inherent tax incentives, in the form of tax notches, induced tax avoidance behaviour in the timing of transaction, and average buyer and seller are willing to wait 3-4 weeks to avoid 1% of transaction tax. Exploiting discontinuity in tax liability at daily level, I find that the tax policy has impact on transaction activity that links closely to its rate and lower the overall chance of a property sold. Buyers bear significant tax burden on seller specific tax even when tax-free sellers are abundant in the market both evidence suggest strong search friction in property market. I also find that the differential tax rate in holding duration produce selection effect among buyers with different ex ante probability of trade in the taxable holding period. This chapter contributes to understanding the nature of transaction tax in markets with search friction. Chapter 2, a joint work with S Roy, studies the impact of matrimonial laws introduced by the British in colonial India during 1800s and early 1900s. Legal reforms on marriage practices, including laws on minimum marriage age and female infanticide, were introduced in British Provinces - district that were under British direct rule. Exploiting quasi-random variations of districts that were former British Provinces within each post-independent Indian states, this chapter studies their impact on female education and under age marriages in post-Independent India. From independent sources of large-scale micro data, including administrative records from schools and representative household surveys, we find that in former British Provinces females have 5% lower chances of marrying under the current legal age, and 1.6% higher chance of attending school at 10-16 years old. Child Marriage abolition Act was introduced in 1931, which raised the minimum age of marriage for female to 14. With newly digitized data on district level marriage pattern from Census of India 1901-1931, we find that the act distorts the marriage market in the short-run by increasing the likelihood of girls marrying at young age as it was preannounced before its implementation, while district more aware of the law exhibit lower child marriage in the long run. It suggest that expansion of education for girls in India has demand side constraints from child marriage practice that has historical root. The introduction of prenatal sex-detection technologies in India has led to a phenomenal increase in abortion of female fetuses. Chapter 3, a joint work with S Anukriti and Sonia Bhalotra investigates their impact on the relative chances of girls surviving after birth, fertility and parental investments. We find that it lead to reduction in excess female mortality, erosion of gender gaps in parental inputs such as breastfeeding and immunization, and moderation of son-stopping fertility. For every five aborted girls, we estimate that roughly one additional girl survives to age five. Our findings have implications that sex-selective abortion not only account for counts of missing girls but also for the later life outcomes of girls.

This thesis consists of three papers on completion and conflict in three distinct but related settings. The first paper develops a model of tax compliance and enforcement where homogenous agents receive signals about how tolerant the tax authority is of evasion, and where the latter has imperfect means of detecting evasion. The main results show that increasing the quality of the information that taxpayers have about the tax authority’s tolerance of evasion may increase compliance. This is because if the signals are sufficiently informative, taxpayers are engaged in Bertrand-like competition: if all taxpayers are evading a similar amount, each will have a strong incentive to evade slightly below that amount in order to escape detection. This logic is directly opposed to the culture of secrecy that prevails in many tax administrations. The second paper, jointly written with Madhav Aney, deals with the question of how specialists in violence like the military or the police can commit not to abuse their coercive power. The answer that the paper provides is that competition between specialists in violence creates incentives for them not to expropriate from civilians. The main theoretical results are that these incentives become stronger as competition becomes more intense, both in terms of the number of specialists in violence and in the evenness of their strengths. The hypothesis that greater numbers of specialists in violence leads to less expropriation is tested using crosscountry regressions and found to be strongly consistent with the data, especially for the case of developing countries. The third paper analyses the equilibria of two-player imperfectly discriminating contests of the power-form under incomplete information. This paper develops a method for solving for the Bayesian Nash equilibria of such games by working backwards from the equilibrium distributions of effort, rather than forwards from the distributions of the agents’ types. This method is used to prove that there exist no distributions of type such that effort is an affine function of the type. The method is used to construct an equilibrium where effort is loglogistically distributed, carrying out comparative statics. This equilibrium is shown to be special in that it exhibits a formal equivalence to that in a contest with complete information.