This thesis studies the relationship between asymmetric information, imperfect competition, and market structure in the Italian banking sector. In three coherently connected chapters it extends and adapts different structural models from the literature in empirical industrial organization to the special case of the credit market, introducing informational asymmetries between lenders and between borrowers and lenders. The first chapter gives an introductory overview of the thesis, outlying the fundamental contribution of each paper. In the second chapter, we measure the consequences of asymmetric information in the Italian market for small business lines of credit. We estimate models of demand for credit, loan pricing, loan use, and firm default based on the seminal work of Stiglitz and Weiss [1981]. Preliminary results suggest evidence of asymmetric information, separately identifying adverse selection and moral hazard. We use our results to quantify the impact of asymmetric information on pricing and welfare, and the role imperfect competition plays in mediating these effects. In the third chapter, we look at whether asymmetric information is a potential determinant of market structure in the banking industry. We measure welfare under different counterfactual scenarios, with and without borrower-lender asymmetric information and reducing incumbents’ informational advantage. We develop a dynamic structural game of banks’ entry, exit and investment with learning by branching based on Weintraub et al. [2008b], together with a static framework of firms’ demand for credit, loan size, default and banks’ pricing, that allows us to identify the effect of asymmetric information on market structure. In the fourth chapter, we measure the impact of endogenous multi market contact on entry decisions of Italian national banks. We develop a static model of market structure with incomplete information as in Seim [2006], allowing for global players’ heterogeneity and spatial correlation of entry decisions across different local markets. Preliminary results show that multi market contact enhances banks’ profitability, suggesting that it might facilitate implicit collusion as in Bernheim and Whinston [1990]. The fifth chapter concludes, summarizing the main findings and tracing out the directions for future research.

A novel and an organization would generally be regarded as polar opposites: one deals in fiction, the other in economic realities. This thesis explores the proposition that the novel and the organization share fundamental characteristics of form, function and technique: they work in the same way. The proposition is explored by comparing the emergence of an early English novel, Moll Flanders (1722), and an early English modern organization, the Bank of England (1694). Moll is recognised as significant in the process of the beginning of the form of the English novel; I argue that the Bank can be approached as a primary model of the form of the organization. Building upon Timothy Clark’s exploration of the nature of inspiration1, the thesis argues that ‘the space of composition’, the period from which they emerged, sometimes called the Age of Projects (1680-1720), is inherent in, and inherited by the form of the novel and the organization respectively. They are projects of a projecting age. The metaphor of the project is taken from Defoe’s Essay Upon Projects (1697) and is used as an interdisciplinary lens through which to reconstitute an intimate relationship between the novel and the organization. The thesis is itself understood as a project bringing a reflexive and experiential dimension to the narrative.

Considering the crucial role played by state-owned enterprises (SOEs) and multinational corporations (MNCs) in China’s economic reform, and the growing number and importance of Chinese overseas educated graduates, this thesis explores the early career-development of returnee graduates. The research draws on theoretical perspectives relating to human, social and cultural capital, along with theories of motivation, adaptation and job satisfaction in the course of career development, applied in the Chinese context. Two qualitative case studies were carried out in the banking sector: one in an SOE and the other in an MNC. This involved interviewing returnees, local graduates and managers on their perceptions of the integration of returnees into the organisations. At the individual level, it considered the value of overseas education and the capital possessed by returnees, observing how human capital was produced through graduates’ early stages of career development, and how this contributed to their place of work. At the organisational level, by making use the perceptions of HR managers as well as self-evaluation from returnees, the advantages and disadvantages of returnees were explored, together with their actual utilisation, the rationales behind the HR strategies adopted by the two organisations. This led to an understanding of how the integration of returnees is affected by different social and corporate settings.

This essay consists of three chapters. Chapter one extends Allen and Gale’s (2000) model to a core-periphery network structure. We identify that the financial contagion in core-periphery structure is different to Allen and Gale (2000) in two aspects. Firstly, the shocks to the periphery bank and to the core bank have different contagion processes. Secondly, contagion not only depends on the amount of claims a bank has on a failed bank, but also on the number of links the failed neighbour has. Chapter two studies the policy effect on financial network formation when the government has time-inconsistency problem on bailing out systemically important bank. We show that if interbank deposits are guaranteed, the equilibrium network structure is different from the one under market discipline. We show that under market discipline individual banks can collectively increase the component size using interbank intermediation in order to increases the severity of systemic risk and hence trigger the bailout. If interbank intermediation is costly the equilibrium network has core-periphery structure. Chapter three follows Acharya and Yorulmazer’s (2007) study of the "too many to fail" problem in a two-bank model. They argue that in order to reduce the social losses, the financial regulator finds it ex post optimal to bail out every troubled bank if they fail together, because the acquisition of liquidated assets by other investors result in a high misallocation cost. In contrast to their paper, we argue that there is no "too many to fail" bailout, unless banking capital is costly and market price sensitive. We argue that market price sensitive capital can induce banks herding and high social cost.

The first part of the thesis investigates the characterization of asset prices and investor's behavior under time-inconsistent preferences. For the latter type of preferences, we assume myopia or hyperbolic-discounting (HD). We consider an infinite horizon economy under certainty with two heterogeneous CRRA individuals, one good and one long-lived asset. The question of survival in the market arises when individuals are HD maximizers or myopic with wrong expectations about equilibrium asset prices. We provide sufficient conditions such that more myopic individuals dominate over less myopic ones and also sophisticated HD maximizers with intertemporal elasticity of substitution (IES) equal to one, log-utilities, dominate over HD maximizers with IES higher than one. Thus, individuals that vanish in the long-run will not have an impact on asset prices. On the other hand, asset prices are characterized by extreme dynamics if the economy is populated by myopic individuals only, who have perfect foresight about equilibrium asset prices. We show that even though the dividends of the long-lived asset are constant over time, there exist asset price dynamics that resemble an ever-expanding asset price bubble. The second part of the thesis investigates the characterization of optimal monetary policy under two different scenaria. In the first scenario we consider a two-period monetary economy with inside and outside money and an environment with fix prices and excess capacities in equilibrium. If unemployment is of a keynesian nature, a Friedman rule argument characterizes optimal monetary policy whereas if unemployment is of a more classical nature, high real wages, optimal policy requires positive nominal rates. In the second scenario we consider an economy with idiosyncratic risk and credit frictions. Monetary policy provides missing insurance due to credit frictions through the distribution of non-contingent seignorage transfer across states.

Regional economic growth and development is triggered by a combination of many factors such as public sector intervention, national and regional policies, and private sector investments. Regional development funds, through the application of pertinent objectives, focusing, participation, and co-ordination can certainly make an important contribution on regional development. In Chile one of the main public sector policy instruments for regional development are the Regional Investment Funds. The role of these funds in the economic and social development of regions in difficulty or whose development is lagging has significantly increased in recent years. The country has had a regional development fund, the "Fondo Nacional de Desarrollo Regional" (FNDR) since the mid-1970s. This fund, modest in its beginning, was significantly increased starting in 1985 due to loans from the Inter American Development Bank. The FNDR has played an important role providing basic social infrastructure in regions. However, despite the increasing amount of resources channelled to regions, twenty five-years of existence of the FNDR, and almost a decade since establishment of Regional Governments in Chile, few improvements can be recorded in the way the Regional Funds are being used or on their overall effect on regional development. The main purpose of the study is to analyse the action of the regional development fund of Chile (the FNDR) and its relationship with the overall objective of regional development. Two different empirical approaches evaluated specific effects of the FNDR. The first was concerned with the analysis of particular aspects of the fund labelled as the "key elements" in the running of the FNDR. The second presents and compares the experience of a similar fund for regional development. The fund selected to carry out this comparison was the European Regional Development Fund (ERDF). The specific questions to the "key elements" address three different aspects of the existence and performance of the fund: questions 1 and 2 deal with the very existence or the overall aim of the fund; questions 3 and 4, with the way the fund is being allocated and used; and question 5 is rather different as it tries to explore the possibility of finding other potentials for regional development, not exploited as such, due to the dominance and statutory primacy of the fund.

This thesis examines information imperfections in asset markets and its impact on economic performance through technology adoption and innovation. In a rational setting, where equity market participants take into account common public information in addition to their private signals about fundamentals, equity prices are persistently biased towards the public signals. Chapter 2 investigates the real effect of such mis-pricing, when R&D producing firms rely on equity finance. Relating to the recent technology stocks boom, the model shows how market's optimism causes more innovations. Furthermore, such optimism can generate gains in aggregate consumption. Chapter 3 analyzes equity markets' role in facilitating ownership transfer from entrepreneurs investing in adopting technology to managers running these firms once technology is adopted. Information imperfections in equity market affect entrepreneurs' willingness to invest in frontier technology in two ways. First, uncertainty about equity price or lack of market liquidity discourages technology adoption. This can explain slow technology adoption and limited venture capitalists' participation in under-developed equity markets. Second, imperfectly informed market participants take fast adoption as a positive signal. The resulting increase of expected market value encourages technology adoption. Probability of fast technology adoption is highest at an intermediate number of informed investors. Chapter 4 looks more closely into the extent of asset mis-pricing by endogenizing the variance of investors' private signals. Better quality of freely available public information reduces incentives to invest in private information and can magnify the extent of asset mis-pricing. Furthermore, in a dynamic setting, investors' react more slowly on changes of the fundamentals because incentives to invest in research are low in early trading periods. The chapter also shows that availability of longer price history might not bring asset prices closer to the fundamentals, as investors choose to free-ride on other investors' research efforts.

The central problem around which the research is located concerns the rivalry between - the different forms of unionism in banking, and the response of the employers to this, particularly through national negotiating machinery. The thesis is divided into three parts. In the first, the attempts to develop national machinery during and after the war are examined. This is an historical account which seeks to illustrate the special nature of the inter-union rivalry between, on one side, the staff associations, committed to a co-operative relationship primarily with their own bank, and on the other the TUC union which was committed to an industry-wide basis of organisation. It also demonstrates how the associations, initially very dependent upon the employers, became more independent and operated like trade unions through bargaining while retaining their distinctive ethos. Thirdly, it demonstrates the evolution of employer strategies on this issue. Having formed national machinery, the second section considers the conflicts between the unions which, while formally co-operating together, were still opposed to each other's principles. It looks at the two employer sponsored attempts to resolve this difficulty through the promotion of a merger, and the reasons for their failure. In the third section the operation of national machinery is examined. The thesis considers the bargaining strategies of the unions, arguing that there were in fact considerable points of agreement between them despite their ideological disputes. It also considers the strategies of the employers, and relates these to their corporate objectives in order to contextualise the inter-union rivalry as part cf a broader strategy of stability and control. In the concluding chapter the developments since the demise of joint union working are examined. It is argued that employer strategies have shifted significantly under the influence of corporate developments, and that these have impacted upon the banks' policies towards the competing unions, which are currently operating separately.

Theories of exchange-rate determination have generated a vast theoretical and empirical literature. This thesis adds to that body of literature by asking three questions. (i) How do policymakers respond to exchange-rate misalignment? (ii) How does misalignment affect the decisions of financial-market participants? (iii) What do exchange-rate dynamics reveal about the choices of investors in the face of currency risk? These three questions are tackled with studies that offer broad and tractable conclusions and contribute to furthering the current field of research.

The aim of this thesis is the development of a political economy of large accounting and auditing firms. The importance of this lies in the rapid growth of these firms and the lack of appropriate theories. Economists have applied the theory of the firm to accounting and have approached auditing from agency and litigation costs perspectives, while sociologists have studied the culture of accounting firms and approached auditing using concepts such as ‘legitimation’ and ‘jurisdiction’. These approaches do not recognise that to do justice to the subject matter, we must study accounting firms in the broader context of accounting and its many conceptual and practical problems. These include the conceptual framework, auditor independence, the audit expectations gap, creative accounting, and fraud. To study the accounting firm within the context of accounting the thesis develops a political economy approach that emphasises conflict between investors, managers, workers, and the state. This approach proves helpful because it encompasses all accounting and auditing problems within a framework that recognises agency and links together the profits of accounting firms with their legitimation. The method adopted is the development of a theory of the profits of accounting firms and a model of factors driving auditor independence. Following Bryer, the thesis develops the theory from Marx’s Capital by combining his analyses of ‘bookkeeping’ and ‘commercial capital’. The theory highlights that as capitalist enterprises accounting firms compete with all other capitalist firms for a share of surplus value, as well as competing with other accounting firms. However, the political economy approach also highlights the essential contradiction in accounting: that measuring and disclosing profits can exacerbate the ‘labour danger’. The provocative character of accounting means that disguise of profits is part of its nature, but that this must co-exist with the contradictory need for accurate, objective measurement of profits. The model therefore suggests that the role accounting firms play in disguise is the key to understanding their behaviour. It predicts that as the level of profits and labour militancy rises, so do investors’ demand for disguise. However, because investors need disguise, auditors cannot have full independence, and the thesis concludes that this explains why auditing is within the private sector. Its general conclusion is that rather than being a principle, auditor independence is a variable driven by investors’ needs and the capitalist tactics of accounting firms. The thesis derives and tests two behavioural predictions. First, that accounting firms will exhibit the same types of behaviour as other capitalist firms. Second, the auditor does not act independently. The thesis tests these predictions with evidence of accounting firms’ mergers and profit margins (1986 to 1995), the changes introduced in the US to increase auditor independence (2001 to 2003), and the change to limited liability partnership status (2004 to 2007) in the UK. The high levels of profits disclosed by the LLP accounting firms and the close relationship between mergers and profit margins support the hypothesis that accounting firms adopt capitalist tactics. The wide-ranging debates (1995 to 2005) and changes to auditor independence rules introduced by SEC and Sarbanes-Oxley support the hypothesis that claims of auditor independence are untrue, and that the level of audit independence is a variable. The thesis proposes further development of the theory through historical research and formalising the model.