Thesis advisor: Philip E. Strahan / The first essay of this dissertation measures the real effect of increases in local deposit supply on local economic outcomes. To identify this effect, I use exogenous variation in local deposit supply from oil and natural gas shale discoveries. A change in deposit supply should have its largest effect on areas where credit supply frictions are the strongest. I find that the effect is strongest in areas dominated by small banks. The second essay analyzes the investment policies of public and private natural gas firms, and is joint work with Jérôme Taillard. We find that privately held firms are 60% less responsive to natural gas price changes than publicly traded firms. Additionally, we find that private firms do not respond to new shale investment opportunities, whereas public firms do. We believe these results are consistent with private firms having a higher cost of external capital. The third essay empirically tests whether firms increase risk taking activity when they are close to distress due to the risk taking incentives of equity-holders. I find that firms actually reduce risk taking when they are close to distress, and in the years prior to bankruptcy. This evidence suggests that risk reduction incentives may be more important for the average firm as it gets close to distress. / Thesis (PhD) — Boston College, 2014. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.